Tesla's Promotional Tactics in the UK Market

Introduction

Tesla Inc. is an American electric car and clean energy manufacturer headquartered in California. Currently, according to Boudette (2021), the company sells electric cars, home and grid-scale energy storage equipment, solar roof tiles, solar panels and other related products and services. The company is currently ranked the best -selling battery-electric and plug-in, with a market share of 23% in the battery-electric segment and 16% of the plug-in segment by 2020 (Tesla Annual Report, 2020). Tesla’s revenue in 2020 was US$31.536 billion, with an operating income of US$1,994 million and a net income of US$721 million in 2020. By 2020, Tesla reports indicate that their full-time employees in all its subsidiaries totalled 70, 757. The company’s name is a tribute to an electrical engineer and inventor Nikola Tesla. Since its founding, the company has been run by Elon Musk, the current CEO, who contributes most of the funding and has served as the company CEO since 2008. According to Tesla Annual Report (2020), Tesla’s debut in the electric car market was in 2009 with the production of the Tesla Roadstar.it later followed up with a few other models such as the Model S sedan in 2012, the 2015 Model X SUV and the bigger Model 3 in 2017 (Tesla Annual Report, 2020). Today, according to Tesla Annual Report (2020), Tesla’s Model 3 is considered the world’s bestselling plug-in electric car with sales of up to 800,000 units by December 2020 (Tesla Annual Report, 2020). This essay explores Tesla’s promotional tactics as a company that operates in the UK.

Promotional Mix and Activities of Tesla

Brick and Mortar Location

Tesla’s stores work significantly different from regular stores. For instance, according to Thomas & Maine (2019), customers cannot make any purchase in the store. Rather, they can only see the cars to help with making the purchase decision. This strategy, according to Kim (2020), removes the stereotyping that normally comes with car dealerships of incessantly following the client and trying to upsell at every opportunity within the buying process. By not selling through the dealership, Tesla uses its stores not as sales points but as locations for educating potential customers about the products.

When a customer walks into a Tesla shop, they have a chance to view all the vehicles on display then they are guided by the staff on how to make a purchase on their phone within minutes. As a result, the store stays open with only a few Tesla crews who assist with any questions or helps the customer navigate through the online purchase system (Jing, 2020). Meanwhile, according to Wu (2020), the stores also carry a small number of inventories for customers who would like to drive away with their cars immediately. By reducing the number of Tesla crews on-site, the company reduces operations costs and passes that cost savings to customers (Fisher & McCabe, 2019).

As described by Elon Musk, the Tesla store is designed to give customers the best experience, comparable to the membership of a VIP lounge or the treatment airline gives to frequent customers (Gali, 2020). Tesla has designed its stores to combine the feel of an apple store and a good restaurant such as Starbucks, where the customer can see their meals being prepared – the chef has nothing to hide. When they visit the Tesla store, customers can see technicians work on their cars. Because there are electric cars, there are no smokes, no loud engines, and no spilt gasoline or oil. Rather, the customers can only hear the turning of a wrench or the quiet whir of the vehicle. The shops are on display and out front. Customers can see an engineer work on their cars as they sip a cup of coffee in the lounge. The company, through its exclusively comfortable stores, positions itself as one of the top tier companies in the market that high-end customer service at no extra cost (Dai, 2020).

For Customer Relationship Management (CRM) the company uses the Azure Storage Explore Open Source cloud service, which is a Microsoft National systems integrator. Apart from providing business intelligence and data management, the CRM system helps clients to view products online, chat directly to salespersons, send emails to clients on product use, and invites customers to webinars (Gali, 2020). This all in one technology enables effective management and streamlining of its business processes for competitive advantage.

Surprisingly, Tesla became a major market player in the electric car industry without spending many resources on TV, radio and billboard advertising. This strategic decision made sense in the past when the company had more demand than it could supply, and customers could wait for months if not years to receive their orders. For instance, at some point, the company did not promote the Model 3 because they could not talk about a product they would not deliver.

But with the ramping up of the electric car industry competition, Tesla recently developed an advertising strategy that targets television, radio and billboard. In the latest examples, Tesla released ad-like 30-40- second videos that demonstrate the different ways of fueling vehicles instead of the traditional diesel or gasoline. For instance, on its ‘discover charging on the road’ video, the company showcases its Supercharger network, a move designed to advertise more than 2000 charging stations. Through the advert, the company demonstrates how the Tesla Supercharger network has enabled long-distance driving and road trips. This advert targets the long-distance drivers who would like to plan a trip without worrying about running out of power.

Tesla also release another advertising video about charging at home, which they claim is arguably the best advantage of electric cars. In the advert, Tesla demonstrates the possibility of waking up to a full tank worth of gas without having to go to the petrol station. It also uses that advert to demonstrate how tesla car owners have the option of installing a 240-volt outlet at home of use one at the charging station. This advert targets homeowners who can afford installing the charging point on their garages as well as those who just prefer charging at the nearby charging stations. This advert also displays the range of options tesla owners have in terms of the source of power. It informs tesla owners that they can charge through the grid or install solar panels in the house and charge through solar power.

Digital promotional activities

Tesla has leveraged on social media and even surpassed some of the more established brands such as Volkswagen and Chevrolet in terms of the success of their social media campaigns. While it is unsurprising that bigger companies would outperform their smaller counterparts in terms of social media presence – due to more resources and employees, it is impressive to see that according to industry analysis such as talkwalker.co, Tesla outperformed the likes of Ferarri, Toyota and Honda in terms of social media presence across all the channels (Folscchette 2021).

One of the most effective strategies the company has used to achieve tremendous success in social media advertisings is the online presence of its CEO, Elon Musk and his non-hesitation to use the platforms in promoting the company’s business. Upon suspending its traditional advertising plans, Musk’s social media activity has become more critical drawing the world’s attention towards the company across all the major social media platforms (Twitter, Instagram and LinkedIn). Musk Shares the company’s new business ideas, and informs his followers of any interesting ventures, discoveries and technological advancements that Tesla is either undertaking or have achieved (Folscchette 2021). He also uses Social media to inform followers of any changes, delays or juts respond to questions – enabling the company to ride on his popularity as a marketing tool.

The company’s unique use of social media is also worth noting. For instance, according to Folscchette (2021), the company may tweet only four times a month but remain to be among the top companies with greatest social media presence. For instance, the Tweet below is one of the most shared tweets we looked at and that depicts the company’s unique use of social media platforms. It is does not look like an ordinary post that a company can copy or even consider adopting. But because Tesla has got the whole world’s attention to it, less is arguably more.

Lastly, much of Tesla’s success is also attributable to it ability to grab the attention of millennials through the social media. The company’s social media posts intrigue the innovative millennials to want to know more so that they do not miss out on the ‘next big thing.’ For example, the company’s frequent mentioning of autonomous and electric cars has earned it more social media followers compared to other established electric car markers such as Renault and BMW. In this regard, reports by Folscchette (2021) indicate Tesla outdoing all the other major brands on social media discussions about electric and autonomous cars:

What outside agencies are saying about Tesla

Tesla’s revolutionary electric car and clean energy technology have exposed it to both criticisms and good reviews over the years. Consequently, industry analysts, regulatory bodies, umbrella group and the press have offered different opinions on the company and its operations, some proving to be detrimental to the company’s public image. For instance, recently, the US’s National Transport Safety Board (NTSB) called on the National Highway Traffic Safety Administration to develop stricter regulations on automated vehicle technology, using Tesla as an example. NTSB called out Tesla for using customers to test the beta ‘full self-driving technology on public roads – marking it as a safety hazard (Kolodny, 2021).

Furthermore, the company has received much criticism from tech analysts over the ‘Full-Self-Driving’ (FSD). Despite the names being hyped to imply that the cars can drive hands-free, Tesla cautions its customers through the owner’s manual that the FSD technology requires active supervision (Kolodny, 2021). Nonetheless, Elon Musk has repeatedly hyped the FSD through social media and interviews even though Tesla’s fine print financial reports, its correspondence with regulators and its legal team refer to the FSD with a precise and subdued tone. For example, in April 2019, Elon Musk claimed that the FSD would be so good that Tesla will not have to manufacture pedals or steering wheels in two years (Kolodny, 2021). This array of communication inconsistencies has largely been noticed by commentators, customers and competitors who have taken advantage to claim Tesla’s dishonesty to electric care consumers.

Effectiveness of Tesla’s promotion tactics

Model 1: AIDA

The AIDA model explains how managers can trace customer journey from Awareness, Interest, Desire, Action (AIDA) to develop effective marketing strategies. It is among the best known and most popular marketing models used by marketers to consciously and subconsciously plan their marketing communication strategies. Ideally, the model identifies the cognitive stages a potential customer goes through during the buying process (Budimansyah et al, 2019). according to Ardhanariswari et al (2020), it is, therefore, a purchasing funnel whereby customers go through each purchasing stage to help them make the final purchasing decision.

The designers of this model argue that the customer purchasing process is no longer about the relationship between the buyer and the seller because various marketing platforms such as social media have created avenues of information sources that could influence the customer’s final decision (Fortenberry & McGoldrick, 2020). Tesla created a widespread awareness of the Tesla Model S – the potential customers who moved from awareness to interest were the ones who took time to seek out more information about the model through the Tesla website, news articles or sought reviews from friends and families (Thomas & Maine, 2019). Some of those potential customers made a leap from interest to desire after having enough information to make the purchase decision. At this point, the number of consumers who wanted to buy the car was more than the number who could afford it – narrowing the funnel - from the desire to act. Finally, the satisfied model S owners influenced new potential customers (at the early stages of the funnel) through reviews and referrals (Budimansyah et al, 2019).

Tesla applies the AIDA model through its primary forms of advertising – the Tesla Stores, all of which use location advantage to attract customers. Upon identifying that their target customers are positioned around high-end retailers, businesses and restaurants, the Tesla stores are positioned to dictate the where, when, what and how its marketing message is delivered (Jing, 2020). This helps create awareness for the brand among the most likely customers. While other care dealers locate their stores along the main roads, Tesla locates its store around major brands such as Coach, Banana Republic, Bloomingdales or Nordstrom – each shop taking a space small enough to squeeze only one or two vehicles. Those purchasing from the high-end shops will likely develop an interest in Tesla’s high-end cars and have a desire to purchase one (Wu, 2021).

According to Gali (2020), the company has made many sales from people who had no interest in buying a Tesla until they saw the Tesla showroom (probably in a mall when ‘window shopping). Any customer who gets impressed by the cars walks straight to a salesperson in the store rather than plan a trip to a dealership. The sales team have been trained on how to use various communication devices, including how to use mobile phones to make a purchase.

Model 2: The Push and Pull strategy

Su et al (2020) defined push strategies as the strategies implemented by marketers to push the products towards the customers, while pull strategies are those implemented by managers to pull the customers towards the products. According to Pap (2017), push strategies are a good way to move the customers from awareness to purchase while pull strategies are effective in maintaining an ongoing relationship between customers and the brand. Nonetheless, according to Pap (2017), both pull and push strategies serve the purpose of moving the customer along the awareness to purchase journey.

One of the most evident applications of push strategies applied by Tesla is the use of Instagram boosted posts and advertising. Instagram is a social media website with millions of users globally. It provides an effective platform for push and pulls marketing strategies that Tesla has taken advantage of since its inception. For instance, upon identifying its audience, Tesla targets them through Instagram advertising and boosted posts. Through boosted posts, Tesla shows up on the audiences’ news feed as an ad (Thomas & Maine, 2019). On the other hand, Tesla uses Instagram ads that optimize for video views, website conversions, shop orders and app installs. Through the boosted posts and ads, Tesla specifically targets its users by location, demographics, interests and strategies (Maoheng, 2018). These ads run on potential customers’ Instagram feeds and pushes them to Tesla’s page and or website to make a purchase.

The other push strategy applied by Tesla is the personal selling at the Tesla stores. The social media push strategy works alongside the Tesla stores, whereby after viewing social media advertisements, customers can go to the Tesla stores to view the vehicles – helping them through the awareness to purchase journey (Thomas & Maine, 2019).

Tesla also uses trade shows (e.g. International Fly-In Expo) as a push strategy to encourage demand from potential customers. According to Helmus et al (2018), the trade shows offer an opportunity for potential tesla customers to learn more about the Tesla products including its newly advanced convenience and safety features, user guides for the newer models, and generally how electric vehicles can serve them better than normal vehicles (Bruijl, 2017). according to Helmus et al (2018), trade shows are effective in creating brand awareness and raining the products’ profile by displaying new innovations and best quality products. Similarly, Choi (2018) remarked that Trade shows provide an opportunity for brands to meet potential customers in-person, enabling the brand to build an opportunity with potential customers.

While the company does not have a large marketing and advertising budget to conduct large scale multinational marketing campaigns, it relies on word of mouth referrals to push its products towards potential customers. According to Tesla.com, word of mouth referral has been a key element of Tesla’s marketing since 2008 when the Roadster model was launched. The application of the same referral program has worked well for the Model 3 – which has become one of the best-selling luxury cars in the United States (Tesla Annual Reports 2020) as well as the world’s bestselling electric car in 2020 (Tesla Annual Reports 2020). Recently, Tesla renewed its referral system despite the previous one being successful (Tesla Annual Reports 2020). In the new referral system, any time a friend purchases a Tesla with a referral code, both the referee and the purchaser receive 1000 miles worth of free Supercharging. The refers code also gives the referee a chance to win a Founder’s Series Model Y monthly – designed by Franz von Holzhausen and Elon Musk.

In conclusion, Tesla has adopted an effective marketing mix strategy that puts it ahead of its competitors. Its marketing and communication strategy are effective and efficient. It appeals to tech savvy young professionals and environmentally conscious customers. With its continued innovation and technological development, Tesla’s marketing and communication strategies will continue to complement its strategic operations to put it ahead of the rest.

Dig deeper intoTesla Marketing Strategy.

References

Annual report Form 2020. Tesla Inc". tesla.com. Tesla Inc., Securities and Exchange Commission. Retrieved January 28, 2021.

Annual report Form 2020. Tesla Inc". U.S. Securities and Exchange Commission. Retrieved February 9, 2021.

Ardhanariswari, K.A., Pratiwi, K.W., Probosari, N. And Wijayani, A., 2020. The Development Of Hierarchy Effects Aida (Attention, Interest, Desire, Action) Model In Communication Branding Strategy Of Tepal-Sumbawa Coffee. Dinasti International Journal Of Digital Business Management, 1(4), Pp.536-547.

Boudette, Neal 2021. "Tesla Says It Hit Goal of Delivering 500,000 Cars in 2020". The New York Times. Retrieved January 6, 2021.

Bruijl, G.H.T., 2017. Tesla Motors, Inc.: Driving Digital Transformation and the Digital Ecosystem. Inc.: Driving Digital Transformation and the Digital Ecosystem (October 14, 2017).

Budimansyah, D., Fitriasari, S., Iswandi, D., Muthaqin, D.I. and Yudistira, R., 2019, February. AIDA Model PC Extension (Attention, Interest, Desire, Action, Based Projectcitizen) to Address the Practice of Bullying among Students in the Regency of Pangandaran. In 5th UPI International Conference on Technical and Vocational Education and Training (ICTVET 2018) (pp. 527-534). Atlantis Press.

Choi, H., 2018. Technology-push and demand-pull factors in emerging sectors: evidence from the electric vehicle market. Industry and Innovation, 25(7), pp.655-674.

Dai, R., 2020. The Analysis of Tesla's Competitive Strategy for the Chinese Market.

Fisher, M. and McCabe, M.B., 2019. Tesla: Accelerating to Market. Journal of Strategic Management Education, 15.

Fortenberry, J.L. and McGoldrick, P.J., 2020. Do Billboard Advertisements Drive Customer Retention?: Expanding the “AIDA” Model to “AIDAR”. Journal of Advertising Research, 60(2), pp.135-147.

Gali, G.R., 2020. Corporate and Business Strategies of Tesla Company. NOLEGEIN-Journal of Entrepreneurship Planning, Development and Management, pp.10-23.

Helmus, J.R., Spoelstra, J.C., Refa, N., Lees, M. and van den Hoed, R., 2018. Assessment of public charging infrastructure push and pull rollout strategies: The case of the Netherlands. Energy Policy, 121, pp.35-47.

Jing, X.U., 2020. Analysis of the Operation Strategy of Tesla Inc. in China. Frontiers in Economics and Management Research, 1(1), pp.21-25.

Kim, H., 2020. Analysis of how Tesla Creating Core Innovation Capability. International Journal of Business and Management, 15(6).

Kolodny L. 2021. A federal agency warns Tesla tests unfinished driverless tech on its users. https://www.cnbc.com/2021/03/12/tesla-is-using-customers-to-test-av-tech-on-public-roads-ntsb.html

MAOHENG, W., 2018. RESEARCH ON THE BRAND MARKETING OF TESLA ELECTRIC VEHICLE (Doctoral dissertation, SIAM UNIVERSITY).

Papp, J., 2017. Push or pull-marketing to be used in business higher education. Prace Naukowe/Uniwersytet Ekonomiczny w Katowicach, pp.222-243.

Su, D.N., Johnson, L.W. and O’Mahony, B., 2020. Analysis of push and pull factors in food travel motivation. Current Issues in Tourism, 23(5), pp.572-586.

Tesla (2020) Discover: Charging on the Road, https://www.youtube.com/watch?v=LWb_sFY9wvE&t=24s Tesla 2021. Tesla’s New Customer Referral Program. Retrieved From: https://www.tesla.com/blog/teslas-new-customer-referral-program (Accessed on 29/3/2021)

Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production, 235, pp.653-663.

Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production, 235, pp.653-663.

Wu, H., 2021, March. Comparison of Marketing Strategies Between Emerging and Legacy Companies. In 6th International Conference on Financial Innovation and Economic Development (ICFIED 2021) (pp. 195-198). Atlantis Press.