Tesla Motors is a relatively new company, as it only commenced in 2003. The company ventured into one of the most competitive global industries, the production of motor vehicles. After commencement, the company attracted one of the most charismatic corporate leaders of the 20th century, Elon Musk. Musk excelled in marketing and innovation, which enabled him to build one of the most successful motor vehicle brands in America. The most excellent marketing tool offered by Tesla is hope for a greater future. Due to this hope, the company's stock has continued to rise gradually, despite the company recording annual losses almost every year. Remarkably, Tesla is now one of the largest automakers in the world by market capitalization after less than two decades in the market.
The main product offered by Tesla is a variety of computerized electronic cars. Tesla sells the vehicles, then provides the digital components on a type of prescription service, thus keeping its customers connected to the company. Tesla cars are fully electric and rely on the part of the competitive advantage being an advanced battery pack that enables elongated travel on a single charge. Secondly, Tesla has built an infrastructure of charging centers around the USA for its customers to charge their cars at discounted prices. Finally, Tesla cars come with advanced computerized capabilities, including self-drive capabilities.
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Management-Decision Problem or Business Issue
Tesla vehicles have highly advanced inbuilt computers running on a combination of specialized hardware and software. Whereas the concept of computerized cars precedes Tesla, the company has advanced the idea to the point of transformation. For example, the same Tesla car can have a price difference of thousands of dollars, depending on software alone. A vehicle with auto-drive capabilities can cost as much as $8000 more than an ordinary Tesla of the same class and model (Acker & Beaton, 2016). Further, Tesla maintains substantive control of the software through programs such as over-the-air updates. The manufacturer can make substantive changes to the car through these updates, including the vehicles' performance. The available commentary shows that some customers are happy with Tesla's software capabilities and the company's ability to upgrade and improve their cars regularly (Acker & Beaton, 2020). However, other customers feel that Tesla breaches their right of ownership for vehicles that they have rightfully purchased. Some customers express concern that their cars can undergo an extreme metamorphosis without their consent or knowledge and to their detriment (Acker & Beaton, 2016). Based on the above, over-the-air updates could be a source of competitive advantage for Tesla. However, this technology could also be a reason for customer displeasure and negative publicity to the company's detriment. Perhaps the biggest problem for Tesla's marketing team is not knowing if their revolutionary over-the-air updates are favorable or detrimental to their marketing campaigns .
Research Objectives and Questions
The biggest problem for Tesla’s marketing team is not knowing if their revolutionary over-the-air updates are favorable or detrimental to their marketing campaigns. There is no doubt that Tesla’s over-the-air-updates (OTA) are a source of competitive advantage. According to Parashar (2019), Tesla’s competitors, such as Ford Motor Company, General Motors, Toyota, Fiat, and Honda, are in the race to develop well-connected models capable of receiving OTA updates like Tesla. In May 2019, GM launched an electronic platform for next-generation electric and smart cars. GM will likely introduce smart cars as early as 2023. Smart cars will be capable of receiving OTA updates.
OTA update is a source of competitive advantage, and clearly, Tesla is on the lead. The innovation was meant to improve customer experience by allowing Tesla to continually improve on their models once customers have bought them. For example, when customers complained about the braking distance on Tesla Model 3, Tesla found a solution and shipped it to the customers within days as part of OTA updates. Tesla is capable of improving its track performance through OTA updates. However, OTA updates can change every aspect of the vehicle, and customers might not appreciate it (O’Cane, 2018). OTA updates create that feeling that a user could use a car today, and tomorrow the vehicle can do some things differently or have more capabilities due to OTA updates.
Therefore, the research objective is to find out the perception of Tesla’s customers towards OTA updates. The research will focus on finding if Tesla customers are satisfied with OTA updates or not, and it will also identify some of the OTA updates issues that customers are not happy with.
Hypotheses
H1 Tesla’s over-the-air updates have a positive effect on Tesla’s marketing efforts.
H2 Tesla’s over-the-air updates have a positive impact on the customer’s perception of Tesla products.
Research Approach
Tesla’s over-the-air update is a new technology. The study employs an exploratory research design to generate a better understanding of the issue. The purpose is to identify a relationship between Tesla’s OTA updates and marketing. Bramer et al. (2017) state that an exploratory study focuses on general ideas, and it can be used to identify other smaller issues. An exploratory study answers questions on what, why, and how. The marketing department at Tesla is interested in finding out how OTA updates affects sales and customer perception to guide future marketing activities. The exploratory research design will enable the researchers to gather data from Tesla customers on OTA updates’ impact.
The study will use an online survey to gather information from the respondents. A survey is the best method of data collection for the study as it can be sent online. With a survey link, the participants can quickly fill the survey using their computers or smartphones. Short length surveys tend to attract higher response rates to enhance the credibility of the study.
Compared to other methods of data collection, a survey is easy to administer, affordable and is not time-consuming.
The study targets Tesla customers who have used OTA updates. The marketing team will conduct the research. Tesla has a database of its customers, and they will be the target population for the study. It is impossible to administer a survey on all Tesla customers; therefore, a representative sample will be identified to take part in the study. A random sample of 384 individuals will be chosen to take part in the study. According to Bramer et al. (2017), the sample size depends on the uncertainty’s margin. The study will have a 5% margin of error, as a 3% margin of error will require a higher sample of up to 1000 individuals. Simple random sampling will be used to identify the 384 individuals. The sampling methods gives each individual (Tesla customers) has an equal chance of being selected as part of the study. Simple random sampling is stringent, and it allows for generalization of the findings and statistical analysis of the findings.
Large samples are associated with a high non-response rate. It is essential to include an estimated non-response rate when calculating the sample size. The researchers can send 500 questionnaires to a random sample. An acceptable response rate of 65% will be applied. Concise questionnaires attract a higher response rate. The researchers should also send reminders to encourage the participants to take part in the survey.
Several potential ethical issues will arise. The first issue is informed consent, which is a voluntary agreement to take part in the research. Tesla researchers cannot send surveys to the participants without seeking informed consent. The researchers seek consent when enrolling the participants after explaining the study’s purpose and assuring the researchers that their privacy will be upheld (Aggarwal et al., 2012). Another important ethical consideration is confidentiality. Researchers cannot disclose the participants’ personal details and must take all the necessary precautions to enhance confidentiality. When researchers collect personally identifiable data such that the respondent’s identity can be uncovered, the researchers must protect private information. Researchers must ensure that their files are password protected and avoid including biographic information that can easily identify the respondent.
Survey and Interview Guide
Aforementioned, the study will use a survey as the method of data collection. An online survey makes it possible to reach out to many participants. The concise questionnaire will be made up of two sections; the first section focuses on demographic information, while the second part will focus on Tesla’s over-the-air updates. Below are the eleven questions that will be included in the survey:
Survey
Part A:
Please specify your gender
Male
Female
Please specify your age?
Please specify your highest education?
Please specify your profession?
Part B
Which Tesla Model do you own?
Model S
Model 3
Model X
Model Y
Are you satisfied with your vehicle’s design and performance?
Very satisfied
Satisfied
Neither
Dissatisfied
Very dissatisfied
(Please give a reason for your answer)
Have you used Tesla’s over the air updates?
Yes
No
Which over the air feature are you pleased with?
Bug fixes
Driving visualization
Safety features for example sentry mode
Lane departure avoidance
voice commands
entertainment
Others
What are some of the challenges you experience with over-the-air updates?
Update fails
Compromised performance after update
Drastic changes to the vehicle
Has over the air update improved your vehicle’s performance compared to conventional vehicles without over-the-air updates?
Yes
No
Would you recommend Tesla because of its innovative over-the-air updates to friends and family?
Yes
No
The questionnaire starts by seeking demographic information from the respondents. Demographic questions are essential in a questionnaire. A person’s gender, age, education, and income affect an individual in many ways. Science has shown that a person’s gender affects their thinking as men have a stronger left hemisphere, while women have balanced hemispheres. Men tend to be more objective, and they need additions to their vehicles. Women appreciate aesthetic and objective additions too. Age also affects purchasing decisions. Younger people are more likely to enjoy flashy features compared to older adults who want safety features.
An individual’s educational attainment and profession are two related concepts. Organizations are interested in these two concepts because a customer’s education level makes it easy to segment customers and uncover trends. The level of education often determines the customer’s profession and income. The last demographic question focuses on the participant’s profession. Researchers shy away from asking about the participant’s income as it is a sensitive issue, but they can estimate the income from the respondent’s profession. The respondent’s profession and income determine the purchasing power, which will help Tesla market its products better.
The first question in part B is asking which Tesla model the respondents have. There are different Tesla models, and each model has unique capabilities. The OTA updates addresses a Tesla model; thus, participants with Model S will have unique needs compared to participants with Model 3. Tesla is interested in finding out the specific challenges for each model and how these challenges can be addressed through OTA updates. The second question inquires if the participants are satisfied with the vehicle’s design and model. The participants will answer by ticking one choice on the 5-item Likert scale. The participants are also requested to give a reason for their answer. For example, an individual who is already satisfied with the performance might not see OTA updates’ needs or might not be happy with the modifications that OTA updates will bring to the vehicle. OTA updates are meant to improve performance and fix existing issues, and these questions will identify some of the issues that Tesla customers are facing.
The next question focuses on OTA updates, particularly the issues that OTA updates have solved. Every time Tesla releases OTA updates, the goal is to address a problem and improve performance. The customers have different experiences with OTA updates, and question 8 attempts to identify the usefulness of OTA updates from the customer’s perspective. The next question focuses on the challenges of OTA updates. Customers have reported incidences where the software updating process stuck or more problems after updating. Problems with OTA updates can discourage customers from buying Tesla or recommending Tesla to others. Question 10 asks the participants whether OTA updates have improved their vehicle’s performance or not. If OTA updates improve performance, customers are more likely to buy Tesla products in the future because they are satisfied with OTA updates.
Design a Face-to-face Interview- Qualitative Interview Script
Introduction.
Hello, my name is Bill Mayers*. I am a market researcher at Tesla. We would like to learn more about your experience with Tesla’s over-the-air updates to help Tesla improve on OTA updates. Feel free to express your views and opinions about the topic. Before we start, I am requesting your permission to record our conversation for accuracy purposes. The recording will be transcribed, and your name and personal information will remain confidential.
Interview Questions
What do you like about Tesla’s over-the-air updates?
What do you dislike about Tesla’s over-their-updates?
Have Tesla’s over-the-air updates improved your experience and satisfaction with your vehicle?
Statistical Tests
The study will use for the study is a one-sample Z test. A Z test is used to test a null hypothesis against the normal distribution. A Z test is more convenient than a T-test because each significance level has a single critical value. Additionally, it is easy to perform a statistical test for a large sample using a Z-test (Pandis, 2015). The sample for the study is 384, and the data points for the sample are independent. The respondents will be selected randomly.
When conducting a Z test, the first step is stating the null and the alternate hypothesis. The null hypothesis is the statement about the population; in this case, Tesla’s customers believe to be true. Tesla believes that OTA updates improve performance and customer perception of Tesla vehicles compared to other vehicles without OTA updates. The null hypothesis puts forth an argument that will be approved or disapproved during the study. The null and alternate hypotheses are stated below:
H 0 Tesla’s over-the-air updates have a positive effect on Tesla’s marketing efforts.
H 1 Tesla’s over-the-air updates do not affect Tesla’s marketing efforts.
The second step is choosing an alpha level or the significance level. This study’s significance level is 0.05, a commonly used significance levels in market research and social sciences. The next step is finding Z’s critical value on the Z table (Pandis, 2015). A two-tailed Z test will have a significance of 0.025% in each tail, and a critical value of 1.96 or -1.96. After calculating the Z test to find if the OTA updates affect Tesla’s marketing, the final calculated value (Z value) will be compared against the critical value of 1.96 or -1.96. If the Z value is greater than 1.96 or less than-1.96, the null hypothesis is rejected. If the Z value is less than 1.96 and more than -1.96, the null hypothesis that Tesla’s OTA updates positively affect Tesla’s marketing efforts will be accepted.
Challenges
The research aims to find out if Tesla’s OTA updates are beneficial or not. There are potential shortcomings that will affect the results of the study. The first challenge is the sample. A sample of 384 is considered a large number, but it might not represent all Tesla customers. 384 is a small fraction of Tesla customers in the US and across the globe. A sample of 1000 would be more representative, but it is more challenging to administer the study and analyze data on a larger sample. The researchers will attempt to improve the credibility of the study by control threats to internal validity. The validity of the instruments and measurements used in the study can also improve the study’s validity. Internal validity is achieved by ensuring that the dependent variable’s changes are caused by the independent variable and no other confounding factors.
Another potential shortcoming is the inability to control the environment and limited outcomes from the study. The survey is administered online, and the responses will be dependent on every individual. Some respondents might not answer all the questions, hence limited outcomes. The structured questionnaire has close-ended questions, limiting individuals as it might not represent customer experience with OTA updates in entirety. The researchers will add another choice to the survey questions seeking simple explanations from the participant for their answers to remedy this solution.
The last potential shortcoming is the difficulty in quantitative data analysis. Data analysis is a crucial component of the study, and it is also the most challenging. Quantitative research is more complicated for marketing studies that are not mathematical in nature, as the researchers have to quantify a qualitative response. For example, the questionnaire asks the respondents if they are satisfied with OTA updates, a Yes/No question. The researchers have to assign a variable/number to the responses when entering into the Statistical Package for Social Sciences (SPSS) to find the relationship between OTA updates and marketing. The research team must work with a statistician to help the team make sense of the data and compute the relationships between independent and dependent variables.
Additionally, ethical issues of informed consent, confidentiality, and anonymity must be addressed. The researchers cannot recruit participants from the Tesla database without informing them and seeking their consent (Cascio & Racine, 2018). The researchers must inform the participants of the study’s purpose and ensure them of their confidentiality and anonymity. Tesla must also take into consideration customer response. Tesla’s OTA updates are an innovation that separates Tesla from its competitors, but customers might not feel the same way. Customers might like the vehicles the way they are and do not want to make modifications through OTA updates. The study will equip Tesla with real customer input that the company must take into consideration.
References
Acker, A., & Beaton, B. (2016, January). Software update unrest: The recent happenings around Tinder and Tesla. In 2016 49th Hawaii International Conference on System Sciences (HICSS) (pp. 1891-1900). IEEE.
Aggarwal, P., Vaidyanathan, R., & Castleberry, S. (2012). Managerial and public attitudes toward ethics in marketing research. Journal of Business Ethics, 109 (4), 463-481.
Bramer, W. M., Rethlefsen, M. L., Kleijnen, J., & Franco, O. H. (2017). Optimal database combinations for literature searches in systematic reviews: a prospective exploratory study. Systematic reviews , 6 (1), 245.
Cascio, M. A., & Racine, E. (2018). Person-oriented research ethics: integrating relational and everyday ethics in research. Accountability in research , 25 (3), 170-197.
O’Cane, S. (2018). Tesla can change so much with over-the-air updates that its messing with some owners heads.
Pandis, N. (2015). Comparison of 2 means (independent z test or independent t test). American journal of orthodontics and dentofacial orthopedics , 148 (2), 350-351.
