it is 12- 15 page paper. i have all of ideas and draft, also prof have take look the draft and gave suggestion already. we also have two example. one of them is a 98% work from last semester, the other one is a example prof gave us. it is a second years course. i
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Ma ke ing Plan fo Te la s Model C Product Line Expansion
Daniel Badiei
Alex Chen
Patrick Gil
Daniel Stipic
Executive Summary
Situational Analysis
Segmentation, Targeting & Positioning
Marketing Strategy
Since i ince ion in 2003, Te la fo nde fought an uphill battle
eo le ha he didn
proving to
need o com omi e o d i e an electric car. This fully
electric vehicle would be more modern looking, faster and enjoyable to ride than
your typical gasoline fuelled car. Te la s Secret Master Plan had the key
components to achieve its mission. It consisted of the following parts:
1) Building a sports car
2) Using that money to build an affordable vehicle
3) Using that money to build an even more affordable vehicle
Simple and brilliant. This plan has captured the attention of every major player
in he a omo i e ind
and ha
ie l
lid Te la in o he
o ld
4th largest
automaker by market capitalization. On November 16th 2017, Tesla announced
their new Roadster 2 sports car and electric semi-truck. Additionally, Tesla has the
capabilities and the opportunity to diversify its product line with an all-electric
cargo van
the Model C.
Particularly throughout North America, Europe and Asia, the electric vehicle
industry is one that is growing substantially year by year. This deviation away from
your typical fossil-fueled car, to a zero-emission electric vehicle is largely due to
Tesla Motors pioneering sustainability in transportation. Surprisingly, one of the
fastest growing vehicle market segments in the US through recent years has been
the cargo van segment. Always looking for constant market share growth and
product innovation, Tesla Motors will look to expand their product line by
introducing the Model C
a fully electric cargo van used for commercial use.
Although they have a strong brand image and recognition, they will be entering a
market segment dominated by likes of big name players such as Ford, Dodge,
Mercedes-Benz and Nissan.
Increase in Small Businesses. As of May of 2017, small businesses (< 500 employees) accounted for 99.7% of all the business conducted in the states. Furthermore, small businesses dominated the share of net new jobs created between 1993-2011 and 2009-2011 with 64% and 67% respectively. With a large percentage of demand for cargo vehicles coming from small businesses across North America, the increase year to year of smaller companies will directly increase the number of cargo vehicles demanded a year. MARKET GROWTH Over the last decade or so, the cargo van market has been one of the fastestgrowing vehicle segments in North America. An approximate calculation of the 4 sales growth of the cargo van market is derived by adding the sales generated by the three dominant market forces: Ford Transit, Ram ProMaster and MercedesBenz Sprinter. Combining American and Canadian sales together, sales from January to December 2016 reached 200,809 units, whereas, sales from January to December 2017 dropped to 198,626 units. These sales figures from 2016 to 2017 represent a market decline of 1.087%. Over the years, specifically December has been a strong sales month within this industry. For this reason, these small market declines end up generally turning into market growth by the end of the calendar year. Table 1: Sales in Units for 2016 and 2017 Calendar Years Model US 2016 US 2017 CA 2016 CA 2017 Ford Transit 130,188 114,980 8,598 11,186 Ram ProMaster Mercedes-Benz Sprinter 31,353 41,140 2,491 2,236 25,049 24,959 3,130 4,125 Total 186,590 181,079 14,219 17,547 S.W.O.T ANALYSIS Strengths. Industry Pioneer, Brand Image and Reputation, Commitment to Quality Weaknesses. Lack of Economies of Scale, Production Delays, Debt Leverage Opportunities. Expand Product Line, Adaptable Battery Technology Threats. High Threat of New Entrants, Dealership Regulations DIRECT COMPETITION With Tesla Inc. looking to expand their product line with the release of the Tesla Model C, they are entering a cargo van market dominated by automotive giants. Over the years in North America, this market segment has been largely dominated by the Ford Transit, closely followed by the Mercedes-Benz Sprinter. Furthermore, 5 another direct competitor to our model is the Nissan e-NV200, the only fully electric cargo vehicle on the market exclusively sold in the United Kingdom. Ford Transit: Strength. Established leader in cargo van market internationally. Weakness. Relatively low cost efficiency. Opportunity. Develop a hybrid model to increase market share. Threat. All other cargo vans looking to take its position as market leader. Mercedes-Benz Sprinter: Strength. High-end brand image and recognition. Weakness. Significantly more expensive than most of its competitors. Opportunity. Develop a hybrid model to increase market share. Threat. Eventual demand shift to a sustainable alternative. Nissan e - NV200: Strength: First fully electric cargo van on the market. Weakness: Only offered in one size minimal cargo space. Opportunity: Expanding production and sales internationally. Threat: Market share expansion of the Model C losing potential international market opportunities. INDIRECT COMPETITION It is important to acknowledge certain indirect competitors such as pickup trucks with capsule attachments as they are also a potential threat to Tesla s market share. Pickup Truck with Capsule Attachment. People look to purchase multi-purpose vehicles one that is practical for personal use while also including reasonable cargo space for work purposes. To fulfill the needs of these certain customers, a pickup truck with a capsule attachment is the way to go. Despite the Tesla Model C not being practical for personal use, it is however advantageous when looking to haul large and bulky equipment given its substantial cargo space. 6 SEGMENTATION, TARGETING & POSITIONING MARKETING OBJECTIVE By analyzing the product life cycle of the Tesla C, it is clearly in the introductory stage of its life cycle. Our objective is to create a product with the intention to maximize its market share. We want to maximize its market share rapidly because the electric commercial vehicle market is still in the introductory phase and Tesla can capitalize on this opportunity by creating a valuable product that would benefit businesses. There are two marketing objectives for Tesla as they continue their expansion: 1. Continue making innovative products that are affordable to consumers that provide them with long term cost and sustainability benefits. 2. Capture a large portion of the electric vehicle market and steal customers away from the traditional petrol and diesel engine competition. To achieve these goals, Tesla should build an affordable electric commercial van with an emphasis on providing value to businesses that will entice them to purchase the Tesla cargo van. Tesla should capitalize on the brand extension as their company is already recognized as the leader of the electric vehicle initiative. Increasing ale i a io i o inc ea e Te la ma ke ha e in he elec ic commercial cargo van segment. Through creating a reliable and cost effective electric cargo van, Tesla can win new business and build loyal relationships that will yield returns for the company in the future. By increasing their market share, Tesla can further boost their profits, this ultimately enabling them to either create more innovative products or make further improvements to existing products. This helping them maintain their dominant position in the automobile industry. 7 SEGMENTATION For Regular Operations (Usage Rate). Businesses purchase commercial cargo vans because it plays a crucial role in the operation of their business. A commercial van is the perfect size vehicle for many businesses to deliver goods or services around the city. These vans also very versatile and businesses are not restricted to using them only for one purpose. These vans tend to be more durable than personal vehicles and are intended for heavy use which is attractive to businesses as they value reliability. Cargo vans also provide the ability to maneuver freely within densely populated areas of the city which makes it a very favourable choice for metropolitan areas. To Protect Goods (Benefit). Businesses purchase a commercial cargo van to protect their cargo from external factors that could affect the condition of their products. Additionally, having the cargo safely secured and locked in the vehicle is a good preventative measure against theft. This segment includes businesses that deliver goods locally or within the city and want to ensure that their cargo arrives at their destination safely. To Save (Benefit). Businesses may want to purchase a commercial van if it would be more cost effective compared to alternative methods. Moreover, a cargo van is a cheaper alternative to a semi-truck because it simply costs less. For firms trying to grow in scale, a fleet of cargo vans may be the most efficient way to conduct their business. An electric vehicle incentive program exists through government agencies in terms of purchasing and leasing rebates and carpool lane access. These incentive programs provide businesses with further cost savings. Businesses are 8 always looking for areas where they can save money by evaluating their operating costs. Complimentary Advertising (Benefit). Businesses may want to purchase a commercial van because it serves many purposes and acts as a moving advertisement. By having the company logo and information on a cargo van, con me ma be mo e a a e of he b ine b and o he good and e ice they provide. Corporate Social Responsibility. Good publicity through showing the business cares about the environment in which it conducts its operations. TARGETING Tesla should place their focus on businesses that are looking to purchase commercial vans that are reliable for everyday use, able to safeguard cargo from theft and damage, and looking to cut costs for a sustainable business. The segments for advertising and corporate social responsibility are not the key segments to target, ho e e , Te la od c c omi abili can bring added benefits that are valuable to these segments. Tesla is a well-regarded brand internationally, recognized as the industry pioneer of electric vehicles and are known to create reliable products for consumers. Tesla should target the businesses that use commercial cargo vans on a regular basis to conduct their operations. Tesla can build up its market share by offering a product that provides value to the business and entices them to switch over from their current commercial vehicle. 9 Tesla must create a product that helps businesses lower costs over the long term to help businesses grow and become sustainable. Understanding that theft and damage of goods can be costly to businesses, it is another segment that Tesla can target. An example would be persuading pick-up truck users to purchase a commercial cargo van for their operations instead of keeping their cargo open in the back of a pick-up truck. By targeting these segments, it will allow Tesla to build up a bigger portion of the market share and further establish relationships with businesses that will benefit Tesla in the long run. POSITIONING The positioning analysis provides our target customers a clear and distinctive offering for the Model C. The first step is to understand the Model C o o i ion o o ecific a ge ma ke and he ni e a ib e al e ha differentiate it from your average commercial vehicle. We accomplished this through doing a points of parity vs. points of difference analysis between the Model C and the average commercial van. We list the common features in everyday cargo vans along-side the unique features you can find in the Model C. This gives us an understanding of where the customer value lies and how to use that to our advantage. Through our research of popular commercial vans in the market we were able to find the common attributes that make the Model C ordinary and the key features that differentiate the product. Points of Parity: Cargo Space, 4-Wheel Drive, Heavy Duty Interior Points of Difference: Less Maintenance, Automatic Doors, Battery, Customizable We identified that the market for cargo vans lacks customizability and technology advancement. We designed our product to be specifically tailored to 10 meet each consumers needs through different options in cargo space, battery power and seating. In our goal to move away from your average heavy duty cargo van we created the Model C to be a very tech-friendly vehicle, through its touch screen interface and its automatic door. By focusing on our points of difference, we can effectively position the Model C in our specific market segments to outperform our competitors. The next step in our positioning strategy is to create a perceptual positioning map. This map helps us clearly identify where the Model C is positioned in comparison to our leading competitors in the commercial vehicle industry. We arranged our competitors according to the two variables we deemed to be most important to consumers in the buying decision process. First, cost efficiency which we measured by cost efficiency per mile. Second, cargo space which we measured in cubic metres, is a key feature that businesses consider usually in comparison with other commercial vehicles. From the vehicle specifications of our competitors we noticed a negative relationship between cost efficiency and cargo space. Where vehicles with poor fuel economy tend to have larger cargo capacity. With the Model C we break this relationship through our 100% electric-powered vehicle while still being able to provide substantial cargo space (10.3 m3) in comparison to the Dodge ProMaster (13.1 m3). B foc ing on he Model C ignifican co -savings and cargo 11 capacity, we can avoid product similarity and uniquely distinguish our self in the market. The final step of our positioning strategy was to formulate our positioning statement. The purpose of this statement was to identify our specific market segments and inform them of the common cargo van attributes while delivering our main message of what makes the Model C unique. Meet the Model C: The Model C i he ideal choice fo an i e b ine looking fo a co efficien way to transport day-to-day cargo while upholding their eco-friendly responsibilities. This ultimate commercial vehicle provides you the ability to run leaner operations while not sacrificing sufficient cargo space needs. Tesla Model C will revolutionize the commercial vehicle industry with its innovative battery technology and its ability to meet the needs of technologically saavy business o ne . 12 MARKETING STRATEGY TESLA MODEL C The Model C - a fully electric commercial van that comes with a standard 75kWh battery with a 350-kilometre cruising range. Notable features that are standard with this vehicle is active lane assist, parking sensors and pre-collision system. These three features ensure that the driver and cargo both arrive safely at the predetermined destination. All these features are calibrated through true depth cameras that are incorporated within the front grille and the rear bumper. These features assist the driver on a regular basis and eliminate potential human errors that may arise when the driver is fatigued. Another feature that caters to the needs of businesses is the cargo temperature control, which allows the operator to ensure that temperature sensitive cargo arrives at the destination under favourable conditions. Tesla Model C offers premium add-ons for an additional cost. Potential features that should be considered are autopilot, assisted parking and battery upgrades. Tesla 13 has already developed these technologies, along with battery upgrades, and incorporates them within the Tesla S and X Models. It would be in Te la in e e to synergize their battery and software production and transfer the system based on the size and dimensions of the Model C. Tesla will offer a variety of sizes for their cabin sizes so that businesses are able to customize the space based on their needs. PRICING The Tesla Model C is trying to establish its presence in a new market segment so we will implement a competition-based pricing approach by assessing the competitive environment. This approach incl de ga he ing com e i o co , prices, and market offerings. The Tesla Model C s MSRP will start at 40 thousand Canadian dollars before government incentive plans apply. The Model C al e proposition can be determined relative to the competition and from that value gap an optimal price can be derived. A competitor within the electric cargo van market is the Nissan E-NV200 electric ca go an. The Ni an ba e ice a a a oximately 30 thousand Canadian dollars. It is important to note that the Model C offers more value to consumers through its points of difference, therefore, a higher price can be justified. The Mercedes Benz Sprinter is prominent in the premium cargo van market and prices start from 50 thousand Canadian dollars. The biggest advantages the Model C can leverage against the Sprinter is its 100% reliance on electricity providing sustainability benefits and less maintenance costs because no oil changes are necessary. However, Sprinter owners may not be entirely convinced by these benefits alone which is why we are employing a price penetrating strategy by 14 undercutting the Sprinter. The goal is to induce adoption of the Model C and gain market share from competitors. Other Considerations A consideration to the benefits listed above is the electric vehicle incentive program which is offered through governments to attract people into purchasing electric transportation options. These incentives include purchase or lease rebates, carpool lane access, and wall charger installation discounts. For example, Ontario offers up to $14000 rebate on purchases of eligible electric vehicles. A business can utilize these benefits to further save on the Tesla Model C, dramatically increasing its value proposition. PROMOTION Personal Selling. Personal selling is going to be the main focus for promotion and we conduct this by sending teams of sales representatives to visit large scale corporations. The focus for these teams is to design a comprehensive report that is tailored around the needs of the specific business that they are targeting. The sales team will focus on conveying the cost-saving benefits and transportation efficiency that the Model C will provide for them. Ultimately, the goal from personal selling for Tesla would be to acquire mass distribution contracts with these major companies along with onsite charging stations. The advantages of personal selling is through its flexibility, being able to specifically design a pitch that directly shows the company how we plan to save them money. What may be problematic for this approach would be the endowment effect, where a company may already have some felt-entitlement towards the 15 commercial vehicles they presently use to conduct their business. We plan to overcome this situation by offering a free trial for one unit of the Model C. With this we provide the business with some sort of sensory experience that will hopefully demonstrate the benefits of the Model C and persuade management to eventually sign with us. We also plan to construct personal selling to smaller businesses through our dealerships located around the world. For example, if a sole proprietor or small business were to walk into one of our storefronts, our sales teams will give expert advice on the important features that the Model C will provide and its implications towards their business. 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