Ch. 7 - Business Marketing

Model S Battery

While Tesla does not market its own products on a business level, they do, like most industrial companies, receive some parts and materials needed to produce said products from other companies who do just that. One part, in particular, that has been the focus of much debate over the last few months is the battery. Since the beginning, production and development of the 7,000 lithium-ion cell EV battery has been achieved through a collaboration with Panasonic. Panasonic was also contracted to manufacture all of Tesla's batteries thus far- which is where the problem begins. Panasonic seems to be having a hard time keeping up with rising consumer demand for Tesla vehicles. This in turn means that Tesla themselves are limited in growth to what Panasonic can produce. The problem is that even though it seems Tesla's battery design will one day become a market standard, for the time being there is a shortage in supply for them. CEO Elon Musk is openly considering cutting ties with Panasonic and opening a battery manufacturing facility of the largest scale in the world. While B2B is a necessary part of any industrial business to some level, there is a lesson to be learned here- if at all possible, certain essentials, supply of which is key to your entire line and production of which is not easy to come by, should most likely be under your own control.

Ch. 8 - Segmenting and Targeting Markets

It's difficult to say that Tesla targets any market, since they do no advertising and don't try to stick themselves in anyone's faces while they are scrolling down the facebook news feed. Not yet in any case. But when they have done is position themselves in the eyes of the consumer market as the best bet in electric vehicles for the long run as well as a legitimate competitor in the major industry of luxury car manufacturers. Although it's not just their price point that enables this positioning, it's not exactly due to any direct marketing efforts. The cumulative efforts in R&D, legal renovation and national infrastructure efforts seem to be noticed by the public at large in the form of buzz, that drives any idealist with a deep pocket to invest in this companies future. If we were to segment the market for Tesla consumers however, it seems Americas top 1 percent, and Europeans, specifically Norway, are very happy with their products.

And although Tesla is positioned as a high-priced luxury instant classic, as mentioned previously, that is bound to change by 2017 when the affordable model is unveiled. By then, if loyalty trends persist and promises keep getting met, they may just overcome a great deal of competitors by a landslide.

Ch. 11 - Developing and Managing Products

The concept of electric vehicles is not one conceived by Tesla by any means, but they are the first company to adopt it wholeheartedly and market it in the luxury market environment, competing with high end traditional vehicles such as Mercedes.
The amount of research they have invested into (both technological and market oriented) creating a "new" feeling to and idea that has been around is not surprising to anyone who has ever sat inside one. As a company who deals solely with electric cars, the only company in fact, they must be the epitome of the concept, becoming a synonym of the word.

While none of their products are exactly new-to-the-world, they have spent considerable time making sure their components (battery, engine, operation system, etc.) are several steps ahead of anyone who has previously conceived of similar ideas. One example is their automatically, constantly updating operation system (much like that of an iPhone), ensuring that all who have invested in their products enjoy the most up to date technology has to offer.
Though the rate at which they introduce new product lines is very slow(only two within 10 years), every product is significantly distinct and designed for a different utility. Although their investment in market research seems fairly limited at this point, the majority of their efforts are routed into R&D, which makes sense considering their technology has yet to have been accepted by the mainstream of automotive consumers, and there is yet a long way to go before it surpasses the existing no
rms in the minds of the majority, in both convenience and price.    

Ch. 18 -Social Media and Marketing

The subject of going "viral" in social media is aptly named, as topics of conversation are passed one from one person to countless others via tweets, posts, and blogs just like a virus traveling through a sneeze, a cut or by eating something someone else didn't like enough to finish. 

It is not surprise then, that any company with hopes for growth and recognition infects society with itself. And although sometimes this is unintentional or unwarranted (people to tend to talk about things all on their own sometimes), many companies use this system to monitor and influence
public opinion of their products or brand. 

In addition to utilizing # (hash-tag) functionality to find common subject posts and tweets to get a feel for what people think in the big broad world, Tesla uses giant media and social hubs such as Facebook and Twitter to seed conversation topics in the form of general information or event publication in the social discussion pool. 

One form of monitoring is direct public positive feedback in the form of "likes". The story of a Tennessee Tesla owner for example, whose car had struck object on the highway then instructed the driver to pull over safely before it shut itself down (eventually catching fire once the driver was safely out side), received close so 6,000 likes on Facebook as of now, showing great appreciation for the cars consideration of user safety. 

Beyond likes on the company Facebook page, tweets and comments on the company Twitter account, I myself, in this very blog, exhibit a form of unprompted positive social media presence supporting the brand and the product with my opinions. Although it is highly likely that hardly anyone reads my posts, I am but one of many, and some blogs become so popular they become a business in and of themselves. Despite being able to contribute some positive information into the pool of social media, it is very much a beast with no master, that reacts more to a company's' actions than it does to it's words.

Ch. 10 - Product Concepts

Model S

While most big name auto manufacturers carry some two dozen models at a time, Tesla these days is producing only one- the Model S. While the Roadster is still sold on the used car market, the Model X's announced release set for 2014, and the anonymous high production model estimated to be on the market somewhere around 2017- Tesla is still in its infancy compared to some century-old producers. With such a narrow product mix and shallow depth, the Tesla brand is practically a synonym of their only currently produced vehicle. Since the less-than-handful of their products have had significant reputation success, the brand equity is of high value despite it's still low market prevalence.

Model X- SUV

Roadster

It is important to stress, however, that he "products" Tesla offers are not only the cars they sell, but the infrastructure that comes along with them at no extra cost to the consumer. Tesla does not merely sell the cars, but also provides the charging stations for free use nation wide that makes driving their cars a viable option. Since owning an electric car would be significantly handicapped to a traditional car if charging stations were not available proportionally as gas stations, the two go hand in hand, and create a substantially higher perceived value.
Since the benefit derived from branding is usually only relevant when a company has many products for which to utilize the associated reputation, a company such as Tesla can easily afford to market the product as opposed to the brand.

Ch. 17 - Personal Selling and Sales Management

So what kind of communication does a $20 billion company with no advertising, niche market share, and expensive products have with its already and potential clients? Well, highly personal.


It is said that the smaller the target market and the more expensive the product, the more personal the relationship should be between provider and consumer. And while it is true that one could just go online, click on all the options he wants and order the car without any human interaction what so ever (as seen on the right), most of us are not that comfortable when it comes to buying a car. But should you ever walk into a Tesla store, beyond the art gallery like homage to automotive technology, you'd find a highly personal and tailored service to help prospective clients get what suits their needs and budgets.

Tesla Store

Since Tesla offers a wide variety of options, and make the cars to-order, the representatives in the store are there to walk you through the process, explain and demonstrate the variety of features, and even take you out on a quiet, clean test drive. While this is true for many other manufactures' dealerships offer such services, Tesla remains the only one of the bunch in the US that maintains a direct manufacturer-client channel of personal assistance throughout the purchase process and future service.  

Ch. 16 - Advertising, Public Relations and Sales Promotion

When the word "advertising" is used, the first thoughts to pop into most of our heads are all those annoying, interrupting TV and radio commercials (with a handful of positively entertaining ones) that give us a chance to use the bathroom during a show, and maybe a few billboards. If you're having a hard time remembering what a Tesla commercial looks like, that's probably because they don't have any. That's right- this 10 year old car company who's stock grew five times its values since January of this year, and who's net worth is in the $20 billion range, doesn't advertise. Yet.

Tesla does utilize social media very well, however this is still not in the realm of paid advertising. Tesla does not have an ad agency nor and internal advertising campaign at this point, as many believe it's too soon to worry about such things ,especially with such positive growth coming along on its own. This may very well be because one thing Tesla has a lot of (as anyone with a penchant for building their own version of a boat and then rocking other peoples old fashioned wooden rafts) is Buzz. Anyone who is even slightly interested in cars, and almost anybody with a hobby of gadgetry knows what Tesla is, despite never having taken a bathroom break on their expense. It's hard to say exactly how this comes about, but information does tend to have a life of it's own once it reaches the infinitely long arms of the internet and social media- and if people are naturally curious enough about what you have brewing it seems advertising is not much needed.

Between company posted tweets, news about the latest scuffle with whining auto dealers, and never ending innovation in technological coolness (Tesla invests most of its revenue back into R&D), there is enough to attract curious people seeking all sort of interesting stories to read with their morning coffee.

Now, I did say "yet" earlier in regards to the no-advertising-necessary mentality, and intentionally so. Thus far, Tesla was targeting a very niche target market that seemed to be drawn in all by themselves. However, CEO Elon Musk has already been openly discussing the 2017 estimated release of a $30,000, 200 mile range affordable sedan, to be released to a wider target market than the current luxury models, shortly after the completion of the major Supercharger project. At that point, the market being targeted is no longer niche, and the market development will require more fishing than before in order to sustain sales in the scale they expect.