Generic business strategies of Tesla motors
Tesla Motors is an automobile manufacture that mainly makes electric cars. The organization has been able to deploy an effective business strategy that has enabled the firm to gain a competitive advantage over the other automobile manufacturers in the industry.
Tesla company applies a generic strategy to differentiate itself from its competitors. The generic strategy is reflected in the company’s approach to using the most advanced technology in the manufacture of its products. The manufacturing of electric cars and other related products as compared to the other automotive manufactures whose vehicles uses batteries gives the company an upper hand in the market. The popularity and the profitability of the company has grown immensely over the years due to the differentiation strategies that is uses. Tesla’s products are differentiated and offer competitiveness to the organization based on how it integrates environmental friendly technology that is highly advanced ( Nykvist & Nilsson, 2016) . This for instance is since it does not use internal combustion engines that is used by the other non-electric automobiles. The organization mainly focuses on the early adopters in high-end markets.
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As part of the differentiation strategy of the company, Tesla Motors has free connections of superchargers which have been strategically placed in locations that can be easily accessed by the drivers of Tesla Electric cars. These convenient locations include various restaurants and shopping centers. The superchargers have also been placed at Wi-Fi hotspot areas. These gargets give competitive advantage to the owners of the Tesla cars as the superchargers can provide up to 170 miles of driving range in a span of 30 minutes ( Mangram, 2012) . This tactic significantly increases the speed of these vehicles along major superhighways that have a supercharger access. As at the beginning of 2017, there were 498 supercharger stations which had an aggregate of 2,804 superchargers. This strategy has enabled the organization to mitigate challenges faced by the other manufacturers of electric cars whereby the drivers run out of energy too soon during the drive.
Tesla Motors uses the premium pricing strategy when determining the costs and prices to set to its products. The organization intensively invests in the most advanced technology to be used in its manufacturing process. This essentially means that the production process is costly. Therefore, Tesla uses high price points to charge its customers based on the uniqueness and the high value attached to Tesla electric cars. Most of the targeted customers of their products are those of high-ends who are willing to pay relatively high prices for the organization’s products ( Markel & Simpson, 2006) . They in return accrue numerous benefits in terms of technology and ecology. The pricing strategy of the company influenced by its innovation and product design. The premium pricing strategy is in tandem with the generic strategy of the firm, putting an emphasis on the uniqueness of its products.
Marketing Strategies Competitive Advantages
In relation to the marketing and distribution strategy used by Tesla, the organization has been able to place a much differentiated distribution that it uses to sell its cars. The company does not have third party dealers but gives its customers the opportunity of booking their desired cars online without being physically present and visiting dealer shops. The online platform is one of the contact points of the customers with the company. It enables Tesla to exercise a great deal of effective customer relations without having to use other parties and also cuts on its costs ( Nykvist & Nilsson, 2016) . The organization also strategically places itself in the market by offering a test drive to its potential customers. This marketing strategy gives Tesla an upper hand in the market over its rivals and also acts as a customer contact point to the company.
The marketing mix of the company has also provided a competitive advantage and uniqueness to the firm. This for instance is the dependent on the viral marketing as part of its promotional strategies. This tactic creates great efficiency in the communication process between the firm and its customers. The use of public relation to boost the popularity of the company, and inclusion its patents as part of the open source movement has immensely improved the perception of their customers towards the organization and the brand.
Business Model Analysis
Core Products of Tesla Motors
Tesla Motors has a few range of product portfolio that it offers to its customers. Currently, the main core product offered by the company is that of Tesla electric car Model-S ( Mangram, 2012). Up to date the company has been able to sell approximately 60,000 units of the car to its market. Roadster model is also one of a limited editions of Tesla cars that has been in existence and it began selling before 2012. Tesla company has also put in place strategies that would enable the intention and introduction of a new car, branded model-x into the market. The core products of the company have been able to attract positive reviews from its customers through the innovative strategies implemented by the firm into their products. According to the National Highway Traffic Safety Administration, Tesla cars have been rated to be highly safe and hence the firm is able to attract more potential customers. The features of the Model-s make their products to be an aspirational car.
Generation of Revenue
Tesla Motors makes money from the revenue it generates by selling its highly differentiated cars. The organization focuses on the uniqueness of its products that is able to attract a specific section of the market. The potential clients of the organization are the high-adopters who value the environmental friendly products of Tesla Motors ( Motors, T. (2011). The company is also highly innovative and incorporates the most recent technology in its manufacturing process. The prices of their products are however not cheap since it does not apply cost leadership in its pricing strategy. However, they are still able to attract many potential clients through the value addition process and offering quality products.
Customer Value Proposition
One of the primary concerns of Tesla motors to its customers is offering safe products. These electric cars are very safe since many incidences that arise such as battery fire in other automobiles are eliminated. These vehicles also have a lower center of gravity that offers it more stability even when driven at high speed. The products of the company are not necessarily bought for reasons of saving fuel costs but since they are incredibly powerful and are also fun to drive ( Markel & Simpson, 2006). Most of the Tesla cars, especially that Model-S are more of sport cars with high speed. The customer of these products value high quality that is well evident in the vehicles and also embrace the use of the most recent technology in the manufacturing process. Some of the unique features of the Tesla cars include the ‘falcon-wing-like doors’ that open upwards and out even in the narrowest parking space. It is in relation to the high customer value created that the clients of the firm are willing to pay from $75,000 to purchase the Tesla car models.
References
Eberhard, M., & Tarpenning, M. (2006). The 21 st Century Electric Car Tesla Motors. Tesla Motors .
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing , 20 (4), 289-312.
Nykvist, B., & Nilsson, M. (2016). Rapidly falling costs of battery packs for electric vehicles. Nature Climate Change , 5 (4), 329-332.
Motors, T. (2011). Roadster Features and Specifications. Tesla Motors .
Markel, T., & Simpson, A. (2006, October). Cost-benefit analysis of plug-in hybrid electric vehicle technology. In 22nd International electric vehicle symposium (Vol. 1).
