TARGET MARKETING
Segmenting
As we begin to discuss targeting specific markets, its important to establish objectives. According Grewel and Levy (2015), we have five distinct segments to consider, Marketers use geographic, gemographic, psychographic, benefits, and behavioral segmentation methods These forms of segmentation allow companies to market towards specific groups and best use the valuable resources available. Geographic data is important to track down popular pockets of the world. Demographics allow us to separate markets by age and generation. Psychological segmentation is based on what customers self-image. Behavioral marketing is when marketing is based on how customers use products and services. Benefits segmentation groups customers based on the perceived benefit of the service or product.
For Tesla, I will be segmenting markets by using Demographics. I considered benefits as well, is all about giving customers what they think they want and need. Benefits are more specific to customers and with a new company thats competing with established brands, getting satisfied customers is vital. However, demographics are a simpler way to separate groups and also satisfy their wants and needs. Ive decided to segment Tesla into 3 major groups: Baby Boomers, X, & Y/Z.
1. Baby Boomers Baby boomers as of now, are now 55 and older, they are the oldest of the segments but one of the most important. Baby boomers have a higher average income in just about every state. Roughly 20% of the US population are Baby Boomers. These are the groups most likely to buy high-end models like the Tesla Roadster & Model S ($250,000&$75,000), not only are they interested in performance and luxury, they can also afford it.
2. Generation X/Early Y Gen Xrs are between 40 and 54 years old. Early Y are between 29 and 39. This generation is the most likely to have their own families and need more space. The Tesla Model X & Model Y would likely fit these markets best. A larger SUV and the mid-size sedan with outstanding safety ratings.
3. Late Gen Y/Gen Z People in late generation y and z are all people 28-years-old and younger. These are the people most interested in the environmental benefits and savings. (While the interest in SUVs and Sportscars is high, the cost is often too high). The Model 3 starts at $39,900.
These consumers likely dont need bigger vehicles like SUVs. The biggest push for this generation is long-term savings of Tesla cars.
Targeting
The main market for Tesla is Generation Y and younger. This generation is the most interested in this technology driven company. The efficiency and state-of-the-art technology are huge for this generation and those are the two most important parts of Tesla cars.
To display the Consumer Decision Process, I will go through the decision process as a person in their late 20s who just got a promotion in a big city. This customer hasnt had a car since they moved to the city but with their recent pay increase are ready to purchase a dependable vehicle. They are interested in technology and longevity of the car; they dont want to have to buy another car anytime soon. Lets see how a common consumer might go about a Tesla purchase.
Need Recognition This person has been financially responsible as well as environmentally conscious by using public transportation in the city. After a big promotion they feel its time to become more professional and benefit from their sacrifice. This person now needs to buy a car. Now, this is not the first time theyve considered buying a car, but theyve never been able to fully commit to traditional vehicles or hybrids. After hearing about electric cars being environmentally friendly and efficient being used more and more, they decide to do research.
Information Search Research can come in many forms but for this generation the internet is likely the first choice. This is where they would inevitably see the Tesla name plastered over electric vehicle sites, forums, etc. Teslas thriving social media because of their technology and CEO is easy to find as well as a huge part of the brand image. As well as a social image, the customer should readily be able to find data on the cars mileage and other specifications. If this. Customer was more interested they could go to a Tesla Display location in which they could learn more information in person.
Alternative Evaluation While the internet provides a lot of benefits for Tesla, it will also benefit Tesla competitors. In this market, there are a few other competitors such as Chevy, Nissan, and BMW. A negative for Teslas lack of availability is that if this costumer goes to a local dealer, they will likely find no Tesla vehicles and no mention of them either. The focus in this area would be to showcase the exclusive Tesla benefits such as the range, style, and technology.
Purchase Once the customer has decided they want to buy a Tesla they choose the model based on their interests, in this case theyre looking for something that is reliable and not too expensive. Lets say they chose the Model 3; in this case they could go to a Tesla physical location and test drive the vehicle before purchase and then ultimately make their decision. A big selling point for the customer is also that Tesla provides a 7-day return policy.
Post-purchase When the car has been purchased and the 7-days have passed, the car is now completely in the hands of the customer. Whether they like the car will depend on its future maintenance requirements and performance. Tesla service centers are specially made for tesla vehicles to receive repairs and adjustments.
Positioning
High Price
Low Mileage Per Charge
Tesla
Jaguar I-PACE Model S
High Mileage Per Charge
BMW i3
Nissan Leaf
Chevy Bolt EV
Tesla Model 3
Low Price
Marketing research and new product development
New Product Concept Statement
Given the option to design a vehicle for this market I would try to design a Crossover Tesla. Something mixed between an SUV and a coupe can fill the space for people who want something bigger than the Model S but doesnt need an entire SUV. This could be geared people who like the outdoors: fishing, camping, etc. this would expand the market to people who like more than just tech. If the mileage could hit 350 miles per charge it would be enough to take a long trip and not worry about energy consumption. A new model like this completes the product lineup for Tesla and provides for all kinds of needs and interests. I would call this the Model Z.
Figure 1: The vehicle style on the left is the style, Crossover
Questionnaire
For this car, I will need a specific target market. The group I have chosen is the young and experience driven. A questionnaire will allow researchers to decide what specific features people want and need. On top of that, gauging what people feel about existing products can help design new ones.
Tesla Study
4. What is the most important feature in a vehicle for you?
5. How often do you go on road trips of 100+ miles each way per year?
6. How much time do you spend driving in cities vs. highways?
7. Rank the following in order of highest priority 1 being the lowest and 5 being the highest.
a. Technology
b. Mileage per charge
c. Style options
d. Safety
e. Speed
8. Have you ever had an experience with a car that made you avoid the brand? If possible, go into more detail.
Product Life Cycle
This product is entering the market in the growth stage and at a time in which Tesla is acquiring a lot of market share and public image success. Its important to release this model now because the public has already established that electric cars and especially Tesla cars are technically capable and accepted. If we were to wait, another company would surely fill the void and outsell us in that market. If we wait too long many people will have accustomed and developed a preference for other brands.
PRODUCT STRATEGY
Branding
The Tesla brand is fairly new in the car industry but has developed a strong reputation of forward-thinking technology and dependable products. This has been supported by a strong social media presence by the CEO, Elon Musk, and a popular appearance online with influencers. The biggest part of Teslas branding is its perceived positioning in the industry. Tesla has the image of a new company unlike all the old car companies stuck in the past. They have renamed the company from Tesla Motors to Tesla Inc. in order to emphasize that they are a technology company before anything else. Tesla has successfully branded themselves in the same way that high-end tech companies like Apple have. Tesla has lots of die-hard fans and supporters even outside of the owners.
Packing and labeling
The Tesla vehicle itself is the packaging of the product. What is interesting in this topic is that Tesla sells only online and through an order process at Tesla owned stores. These stores act as showrooms for cars rather than traditional dealerships which add to the overall experience of purchasing and then driving a Tesla. This store format has been compared to Apple stores in minimalist imagery.
Service Quality
Tesla vehicles have the benefit of lower maintenance expectations such as no oil changes, plug changes, or filter changes. The few regular maintenance activities can be found and scheduled in advance on the Tesla Mobile App (if the driver cannot/doesnt want to do it themselves. All Tesla vehicles come with a warranty that covers batteries and drive issues.
Maintenance that may come from extended use requires customers to go to Tesla-approved service centers and may even be covered by the Tesla warranty that comes with every purchase of a new vehicle. There are currently only 11 Tesla-owned locations for service repairs, this number will increase over time for now it is a hurdle thats been passed by having approved service locations available for customers to find online and be referred through after contacting Tesla.
Legal or Ethical Issues
Within the past year, Tesla has had dozens of lawsuits and SEC investigations. These range from investigations into Autopilot deaths in Tesla cars, embezzling from supply chain issues, employee complaints of spying and illegal cover-ups, and problems with the 2016 acquisition of SolarCity. Tesla is in an on-going investigation by the SEC.
Tesla is in a very dangerous position because while their company has a strong image of environmentally friendly and forward-thinking products, the company has been mismanaged and consistently involved in legal issues. The biggest issue for them is Autopilot deaths, even if theyre not caused by the cars the articles are damning and the idea that one of these cars can kill you is poison to this and any marketing campaign.
References
Baby boomers. (n.d.) Wikipedia: The Free Encyclopedia. Retrieved May 25, 2019 from https://en.wikipedia.org/wiki/Baby_boomers
BMW. 2019 BMW i3. (2019). Retrieved May 25, 2019 from https://www.bmw.com/i3
DriveSpark. SUV vs. Crossover. (2017) Retrieved May 25, 2019 from https://www.drivespark.com/four-wheelers/2017/sports-utility-vehicle-vs-crossover-suvs-comparison-differences-and-which-one-to-choose-024487.html
Generation X. (n.d.) Wikipedia: The Free Encyclopedia. Retrieved May 25, 2019 from https://en.wikipedia.org/wiki/Generation_X
Generation Y. (n.d.) Wikipedia: The Free Encyclopedia. Retrieved May 25, 2019 from https://en.wikipedia.org/wiki/Generation_Y_(disambiguation)
Generation Z. (n.d.) Wikipedia: The Free Encyclopedia. Retrieved May 25, 2019 from https://en.wikipedia.org/wiki/Generation_Z
Marketing Tutor. Consumer Decision Making Process. Retrieved May 25, 2019 from https://www.marketingtutor.net/consumer-decision-making-process-stages/
Nissan. 2019 Nissan Leaf. (2019) Retrieved May 25, 2019 from https://www.nissanusa.com/electric-cars/leaf-2019/
Tesla Inc. Homepage. (2019) Retrieved May 25, 2019 from https://www.tesla.com/about
USNews. Cars. (2019) Retrieved May 25, 2019 from https://cars.usnews.com/cars-trucks/best-hybrid-and-electric-cars
