Power of smart marketing – the Tesla Model S Sedan – Tesla Motors part 3

This is my third and final blog on the brilliant marketing strategy of Tesla Motors. In this blog, i will focus on their Model S sedan specifically.

Tesla Motor’s self-stated key goals in the company’s marketing effort are to

  • “Generate demand for our vehicles and drive leads to our sales teams;
  • build long-term brand awareness and manage corporate reputation;
  • manage our existing customer base to create loyalty and customer referrals; and
  • enable customer input into the product development process”

From a pricing perspective, Tesla Motors does not have a truly affordable “middle-class” car yet. However considering the company’s branding focus is as a maker of premium electric vehicles, the marketing effort is not seriously focused on the main stream car buying public yet. The company has focused its marketing efforts to attract the environment conscious/ class conscious buyer and has not been averse to bask in adulation for being a successful American car maker. At the same time under Mr. Elon Musk’s astute leadership , the company has good financing options to encourage price conscious customers to purchase the car.

From a premium shopping experience perspective, Tesla Motors has been strongly focused on ensuring a distinctive approach. A lot of this focus can be attributed to Mr. Blankenship who pioneered the hugely successful Apple Retail store concept . Mr. Blankenship has been attempting to replicate this success in the car industry by designing elegant stores with substantial investment at highly visible venues. Tesla Motors uses these venues as a means to evangelize the electric car in general and Tesla Motors in particular. The staff follows a model of soft selling with the caveat that due to regulatory restrictions in many states the staff cannot sell the car directly . However this approach appears to have generated significant footfalls for Tesla Motors helping them capture popular imagination despite actually having only a tiny number of cars in the market.

Tesla London Store

A stylish Tesla Store

Tesla Motors in a number of ways has the mindset of a software company.  In addition, Tesla Motors openly flaunts a preference to update the company’s proprietary software over the internet so Tesla Motors customers can benefit from regular software upgrades. This is especially relevant for a company like Tesla whose cars rely on an exceptionally high amount of software most strongly illustrated by the unique 17 inch touch screen console, as an example, the “slow creep” ability to Tesla cars was added based on user feedback. This is important because this is a subtle way of marketing to customers that the user experience and features of Tesla Motors cars are likely to be regularly upgraded even after customers purchase the car when compared to similar high value branded competitors .

Tesla Motors has been talking about ushering the Electric Vehicle revolution in the US . I surmise that even the title of the Model S Sedan is probably a subtle marketing way of bringing reference to the original blockbuster car, the famous Ford Model T that is largely acknowledged to have ushered in the automobile revolution in the US in the early 19th century.

in addition to all the smart marketing approaches I’ve detailed above, The Model S is a technologically superior vehicle. It has the highest EPA rating among all electric cars.  The car has exceptional ratings. It was rated the best car of the year 2013 by multiple prestigious publications,

1) MOTORTREND car of the year 2013
2) 2013 automobile of the year from Automobile magazine
3) had an unbelievable rating of 99 out a possible 100 by Consumer Reports.

As I stated in an earlier blog, the combination of peerless marketing and an excellent product is the key reason for their success. Of course I must add, the incredibly talented Mr. Elon Musk is at the helm of this exciting car company. This ends my analysis of Tesla Motors. Thank you for reading.

Power of smart marketing along with a great product – early days of Tesla Motors – Part 2

This is second of my series of blogs on the Tesla Motors marketing strategy.  In this blog I will examine why the product (in this case, their first car) played a key role in their early success. One of the things Tesla Motors (http://www.teslamotors.com/)  got right early on was targeting their product for the right customer segment. Tesla Motors branded their car as a world class sports car instead of being sold as just a premium electric vehicle. The Tesla Roadster could go for 0 to 60 in ~4 seconds and compared very well with the premium sports cars of its times ~2007-2008.

The key strength was their superior battery pack technology (of densely packing the same Lithium Ion cells that form batteries of our standard laptops in a highly efficient array) and an excellent power train. They were an early adopter of smart outsourcing. To save funds and manufacturing costs as a start-up, while the power train was manufactured in-house, the actual car manufacture was outsourced to Lotus Cars Limited.  These partly complete cars called “Tesla Roadster Gliders” were then integrated with the power train. Though they sold only ~2450 roadsters across five years 2008-2012, The company gained such a niche reputation that this helped them earn several hundreds of advance bookings when their Model S Sedan was formally launched and bookings were commenced years in advance.

Having said this, did Tesla Motors have a fairytale run? Hardly! For starters they suffered two fairly embarrassing product recalls in May 2009 and Oct 2010.  They had fairly well publicized transmission related issues that delayed manufacturing timelines for their Roadster. The global financial crisis from 2008 onwards hurt the luxury car market and lack of funds (as announced in a section of the media) hurt them as well.

Two key turning points financially for the struggling Tesla Motors were a 50 million dollar investment by Diamler AG and more importantly the selection of Tesla Motors along with other firms like Ford, Nissan and now defunct Fisker for the US department of Energy’s Advanced Technology Vehicle Manufacturing Loan Program (ATVM).  Tesla Motors received 465 million $ (the smallest loan among these firms) and invested it brilliantly to acquire and develop the then shut down NUMMI facility from Toyota and speed up manufacturing of their flagship product, the Model S Sedan.

Model S Sedan

The amazing Tesla Model S

The success of the Model S Sedan has made Tesla Motors the first successful new car company in the US in over 90 years! What are the reasons behind this? well that will the topic for my next blog! Thanks for reading.

Power of Smart Marketing – An examination of early days of Tesla Motors

Firstly, in the interest of transparency,  I’d like to declare that I do not own stocks of Tesla Motors (http://www.teslamotors.com) or any of the firms run by Mr. Elon Musk. This is the first part of a series of posts on the marketing and strategic thought process behind the success of Tesla Motors.

Let us take a look at what most of us consider the typical characteristics of a marketing campaign. Typical marketing campaigns involve,

1) A premium Ad agency and associated costs.
2) Large marketing budgets , for instance big budget Hollywood movies spend almost 25-50% of their total budget towards marketing.
3) A carpet bombing approach involving the movie stars attending a slew of interviews, teaser ads in multiple media formats like Print ads, television campaigns, Online interest building via  twitter, Tumblr,  Facebook, A custom built website etc. to name a few.

Now let’s look at Tesla Motors, this is of course before Tesla became a stock market darling in the US and achieved its stellar share growth over the last year or so.

1) Tesla Motors does not have a Chief Marketing Officer
2) They do not have a contract with a large marketing or Ad agency
3) They have a pretty small marketing department.

So how exactly did Tesla Motors build up so much interest on their product?

The first Tesla Roadster (Their first high performance electric car) was produced and marketed from early 2006.  The approach followed was as follows,

1) A very internet centric marketing campaign from very early days. The founders Mr. Martin Eberhard, Mr. Elon Musk published very detailed and smart blogs from the early days (A classic one from Mr. Musk can be found at http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me )
2) Niche appearances at Conferences, effective use of the charisma and connections of Mr. Musk.
3) For example, Mr. Musk appeared on the then world famous late show with David Letterman after selling a car to Mr. Letterman.
4)  Smart product placement of the roadster by providing it free for the first Iron Man movie starring Robert Downey Jr and even for some BlackBerry ads (of course this was before the IPhone era!)
5)  Sale of the Roadster to Mr. Arnold Schwarzenegger the then California Governor,  top movie stars and executives etc.

Mr. Elon Musk with the Tesla Roadster

Mr. Elon Musk with the Tesla Roadster

These marketing strategies ensured Tesla Motors got much higher media and online visibility than the few 100 Roadsters they sold through the first few years.

However it must be noted, marketing alone could not have Tesla Motors to their current position. They obviously had a pretty good product. My next post will examine the product specific reasons and strategy the firm adopted that helped the company along the way. Hope you enjoyed reading this post.