CRAIGDURDICA HAPPI JOHN MARC RAHUL Executive Summary In 2003, a group of engineers from Silicon Valley established the company Tesla Motors Inc. with the goal in mind to build electric powered automobiles that would be better than gasoline powered automobiles. In 2012 Tesla Motors did just that by releasing the Tesla Model S, a sedan sized electric automobile, which will be our main focus for today’s presentation. Mission Statement: “Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible” http://www.quora.com/What-is-Teslas-mission-statement AGENDA ● Situation Analysis ● Action Plan ○ Market Analysis ○ Budget ○ Macro-environmental Situation ○ Action Plan ○ Planning Calendar ● SWOT ● Marketing Strategy ○ Four Ps ○ Product offer ○ Channels ○ Price Plan ○ Customer Relations ○ Brand and positioning ○ Sales Relations ○ Life Cycle ○ Incentives ○ Survey ● Managing Communications Current Plug-In Vehicle Market http://insideevs.com/cumulative-us-plug-electric-vehicle-sales-model-model-breakdown-market-share-data-december-2014/ Current Plug-In Vehicle Market (15%) http://insideevs.com/cumulative-us-plug-electric-vehicle-sales-model-model-breakdown-market-share-data-december-2014/ Customer Analysis and Demographics US map of Consumers who registered for a Model S looks similar to... http://my.teslamotors.com/sv_SE/forum/forums/where-can-tesla-sell-cars http://www.edmunds.com/industry-center/analysis/drive-by-numbers-tesla-in-all-50-states.html States where consumers commute for longest amount of time daily : Geographic Target Top commute cities: 1) New York, NY 2) Los Angeles, CA 3) Chicago, IL 4) Houston, TX 5) Philadelphia, PA Target: Business workers http://www.census.gov Principle Oriented Status Oriented Ex p s er ev hi c A PERSONAL Factors Fulfilleds Action Oriented eri e car represents financial / economic success nc ers want to experience an electric car Vals Model rs e v ri Ma ker s St Believers http://www.strategicbusinessinsights.com/vals/ustypes.shtml Financial Belonging more practical/ Environmentally concious PERSONAL Factors>>> Age Capture now, be remembered later when millennials grow into their economic potential Focus of current sales Mintel Social Factors Roles & Statuses Higher income Successful job (Dr, Lawyer, Athlete) Luxury symbol Showcases wealth Showcases environmental concern, encourages others Celebrity endorsement (clockwise) Ben Affleck, Morgan Freeman, Steven Spielberg SWOT Strengths Weaknesses Opportunities Threats ● Inspired CEO : founded Paypal and SpaceX ● Won Motor Trend’s Car of Year award in 2013, truly a superior product ● Innovative marketing strategy : market in ● malls rather than streets ● Already highly successful, over 750% sales Highway Traffic Safety Administration ● growth from (2012 - 2014) ● Future-oriented product and business model Highest safety rating according to National Supercharge coverage is in plan to reach 98% of US by 2015 ● All vehicles and parts are capable of being built within same factory http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html Brand Ownership and awareness : Oct 2013 Strengths Weaknesses Opportunities Threats ● Higher cost of production due to lack of economies of scale ● Longer pickup time due to customization ● Lack of manufacturing facilities : can it sustain growth in foreign markets http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html ● Struggles with Lithium batteries ● Developing strong brand recognition Strengths Weaknesses Opportunities Threats ● Shared technology which has attracted collaborators such as Toyota ● Environmentally friendly is a growing concern due to global warming ● Unique and modern with not many other competitors yet in the market place ● Gigafactories in the making to increase duration and strength of Lithium batteries ● Forward-thinking product line with the goal of revolutionizing the auto industry http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html Strengths Weaknesses Opportunities Threats ● More car companies (with economies of scale) are attempting to join in with their own electric model ● Priced highly, putting the company at a greater risk during times of recession. ● Cheaper gasoline prices could delay the adoption of the electric automobile ● Challenging the status quo is risky, especially when the market isn’t familiar with product http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html Marketing Strategy Four Ps http://www.usatoday. com/story/money/cars/2014/09/06/why-tesla-has-themost-loyal-customers/15139377/ Dealers? ● Tax incentives ($7,500 in US) ● Focus on receiving press coverage, reviews and awards away from traditional media means ● Big on forum : focus of website is to include feedback from one buyer to another ● Service center marketing : white and clean, no dealers 4 Ps ● To buy : Orders can only be placed through Tesla’s website ● Channel model : Tesla S can be seen in select shopping centers rather than at a traditional car dealership ● All assortments and parts are assembled in one factory and delivered :1000 per week Away from traditional http://scienceofrevenue.com/2013/01/20/teslamodel-s-the-disruptive-marketing-of-an-electric-car/ 4 Ps Electric Elegant Efficient Environmental ● 4 Ps ● ● ● ● ● http://www.teslamotors.com/models Dual Motor (front and rear) digitally controlling wheels for excellent traction control Strong focus on safety with unique electric drivetrain and eight airbags Autopilot equipped Quality material, such as Nappa leather 240 miles range (for 70 kwh, up to 270 miles with 85kwh) Wall connector : 58 miles per hour charge ● Current buying price : from $75,000 (70D kWh battery)$105,000 (P85D kWh battery) (not including incentives) ● Tesla hopes to decrease vehicle price from production of $100k toward $60k 4 Ps ● Leasing :38 states, $6513 down at $818 per month (for 36 months for 70D model) Start High, Plan For Low http://my.teslamotors.com/models/design M a r k e t S e g m e n t a t i o n CUSTOMERIZATION All orders are custom made by consumers online ➢ Done through the Model S’s design studio ➢ Select features of choice are shown at top on image model ➢ Extra options for status oriented consumers ■ Led accent lighting ■ Panoramic glass roof and action oriented consumers ■ 85 kWh performance battery ■ All-wheel drive dual motor http://my.teslamotors.com/models/design M a r k e t S e g m e n t a t i o n CUSTOMERIZATION BODY COLOR OPTIONS FOR CHOICE ROOF COLOR WHEELS BATTERY DRIVE All wheel drive CHARGING Supercharger Enabled INTERIOR Front decor color and material OTHER Rear wheel drive Dual Chargers Subzero Weather Package Wall Connector Headliner color and material Smart Air Suspension Seat color and material Rear Facing Seats Etc. http://my. teslamotors. com/models /design All Done Online (or can seek assistance at our showrooms) http://www.teslamotors.com/what-to-expect Hybrid Service Mix Price Objective Sales Oriented Product Quality Leadership Maximum market share Pioneering a movement of fuel-independent vehicles Internal success leads to growth of this movement Increased production, not changes in price Structural price skimming Release of less expensive models Determining Demand P E rice lasticity of D emand <1 Demand is relatively inelastic Luxury cars are a luxury good Expenditure is relatively small to buyers Distinctive product Few competitors at level of quality Price changes justifiable by consumers Short Term Supply also inelastic, long term growth Sales and factory output determine supply Production cost of batteries to decrease SRAS AD Estimating Costs Fixed Costs Variable Costs Color Metal Wheels Suspension Glass Plastic Delivery Battery size Motor Interior Fiberglass The “look” or style of the Model S “...the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car.” “[Model S batteries are] way less than half, actually,” he says. “Less than a quarter in most cases.” http://insideevs.com/tesla-battery-in-the-model-s-costs-less-than-a-quarter-of-the-car-in-most-cases/ The internals of the Model S Estimating Costs ● Average costs growing ○ Musk invested between $680 and $850 million last year ● New Gigafactory will “minimize risk of delays arising after groundbreaking" -Elon Musk ● Lithium ion batteries lower cost ● European/Hong Kong versions add to cost ○ Right hand side steering http://money.cnn.com/2014/05/07/autos/tesla-earnings/ Select Pricing Method ● Most automobile manufacturers utilize Cost-Plus ○ They add together labor, material, and overhead costs ○ Consumer is overpaying ● Tesla is more value-based ○ Focus on estimated value, not our cost to produce ○ ex. our 4 core packages ○ Consumer gets the best for what they’re paying Auction-type pricing for special events ○ Charities, benefits, etc ● Analyzing Competitor Price Mix $21,500 2015 Nissan Leaf S $26,670 2015 Chevy Spark Features when considering price ➢ $41,350 2014 BMW i3 2014 Mercedes BClass http://www.teslamotors.com/models $41,450 ➢ ➢ ➢ ➢ Custom made and unique based on order Luxury + High Tech Company name : first fully electric car company Up to 691 horsepower Option of up to 85 kWh battery PACKAGE Options $75,000 $79,900 $85,000 $105,000 *Autopilot feature comes standard with 2015 Model S P85D. Can be added for $4,250 for other models http://www.consumerreports.org/cro/news/2014/11/updated-2015-teslas-mean-black-friday-discounts-on-2014s/index.htm Facilities Tesla’s main manufacturing plant is located in Fremont, California. It is a 5.3 million ft² building used as the primary manufacturing center for the company. In April 2014, Tesla leased a 431,000 ft² facility in Lanthrop, CA, which is expected to become the company’s second large manufacturing plant. http://www.teslamotors.com/factory Brand Roles “Door handles are made from hand polished zinc, the leather trim uses premium Nappa leather, and décor pieces are minimally finished to preserve their natural beauty.” ● ● ● The Tesla Model S falls into the High End prestige category. Luxury car with a luxury car price point Built to look like other luxury cars (i.e Jaguar) Quality engineering, servicing, & performance ○ Extremely quiet ride matched with premium stereo system http://www.teslamotors.com/models Value Proposition: We promise the Tesla Model S will be the best luxury electric car on the market and it will be serviced both quickly and painlessly whenever need be. ● ● ● ● Cars made to order Very minimal stock/inventory ○ Pre-made cars sold at a slight discount Small stock of variants of each model (70, 85, 85D, P85D) pre-made ○ Good for impulse buyers Shipped to your nearest Tesla service center for pick up ○ Can also be shipped to your front door http://www.teslamotors.com/support/estimating-your-delivery-date http://www.teslamotors.com/support/service-plans The Model S is in the Growth phase ● Rising Sales & profits ● Early adopters are main customers ● Rapidly growing competition Our objective: Maximize market share ● Adjust prices ● Retain our “infinite mile warranty” ● New ad campaigns ● Increase production and adoption Product Life Cycle Incentives and Rebates Electric vehicle Savings for Tesla Nationwide Incentive in US Foreign Incentives -- $7,500 Federal Tax Credit AUSTRALIA: except from vehicle Free Parking in certain cities stamp duty (saving $6,770) in (New Haven (CT), Sacramento, Australian capital territory Santa Monica, etc) FRANCE: 6300 Euro Eco- -- $2,500 rebate from Clean bonus at time of purchase Vehicle Rebate Project (CA) GERMANY: Except from annual -- Unrestricted access to high circulation tax for 10 years occupancy commuter lanes on JAPAN: Except from acquisition major roadways in certain tax (saving between 381,019 - states (New Jersey, etc) 500,000 yen) http://my.teslamotors.com/incentives/US survey: results Australia(4) Austria(1) Brazil(1) Canada(3) Croatia(1) Germany(2) Norway(1) UK(5) USA(39) TOTAL: 57 survey: results survey: results (friend/coworker/family member) survey: results Marketing Strategy Determining Profit & Marketing Budget Fiscal year is January-December. All values USD millions. Sales/Revenue 2010 2011 2012 2013 2014 116.74M 204.24M 413.26M 2.01B 3.2B - 74.95% 102.34% 387.23% 58.85% 86.01M 142.65M 383.19M 1.56B 2.32B COGS excluding D&A 75.39M 125.73M 354.36M 1.45B 2.08B Depreciation & Amortization Expense 10.62M 16.92M 28.83M 106.08M 231.93M - 65.84% 168.63% 306.39% 48.77% 30.73M 61.6M 30.07M 456.26M 881.67M - 100.43% -51.19% 1,417.48% 93.24% 845.89M 1.91B Sales Growth Cost of Goods Sold (COGS) incl. D&A COGS Growth Gross Net Profit Gross Income Growth Cash and Cash Equivalents .5% of income spent on marketing = 4.4M http://www.marketwatch.com/investing/stock/tsla/financials Current Market Situation http://finance.yahoo.com/echarts?s=TSLA+Interactive#%7B%22range%22%3A%225y%22%2C%22scale%22%3A%22linear%22%7D Consolidated Balance Sheet (in thousands, except share and per share data) December 31, 2014 December 31, 2013 Assets Current assets Cash and cash equivalents $ Restricted cash and marketable securities 1,905,713 $ 845,899 17,947 3,012 Accounts Receivable 226,604 49,109 Inventory 953,675 340,355 94,718 1,905,713 3,198,657 1,265,939 766,744 382,425 1,829,267 738.494 Restricted cash 11,374 6,435 Other assets 43,209 23,637 Prepaid expenses and other current assets Total current assets Operating least vehicles, net Property, plant and equipment, net Total assets $ 5,849,251 $ 2,416,930 Car Industry: 2015 Projections http://www.strategyand.pwc.com/perspectives/2015-auto-trends Setting the Budget MARKETING GOAL Sales-driven funding to Develop Creative Marketing Projects in order to further boost production and scope of operations Currently Existing Commercials: Fan made Advertising by Jordan Bloch 205,974 views by Calvin Everdream Wan by Ajar Pictures http://www.teslarati.com/top-10-fan-made-tesla-commercials/ Magazines Advantages: long life, credibility, good pass-along readership. Concerns to work on: long lead time, no guaranteed position Which individuals to target: Newspapers ➢ Advantages: flexible, broad acceptance, high believability ➢ ➢ Concerns to work on: short life, poor reproduction quality ➢ Suburbians, preferably commuting to work >30 minutes daily ○ magazines + newspapers popular in top commuting US cities, including NYC, LA etc age: mid 30s - 55 Higher income individuals (such as business workers, lawyers, etc.) Invested oriented: spend to save The Economist AUDIENCE DEMOGRAPHICS North American buyer statistics ➢ mean reader is of target age group (between mid 30 and 50) ➢ mean reader makes high average personal income Total readers in north america: US: 803,528 Canada: 80,343 http://www.economistgroupmedia.com/research/audience-profile/demographics THE ECONOMIST Region : North America Color : Black and White (vs $62,875 for color) Format : Page amount : 1x $4 1 , 7 5 0 *Tax not included $2 0 8 , 7 5 0 (for 5) http://next.srds.com.ezproxy.lib.uconn.edu/nmp/datacard/show/41/4 THE ECONOMIST TESLA ADVERTISEMENT EXAMPLES Model S All electric luxury TESLA Model S No emissions luxury Bloomberg Businessweek ● Audience of 980,000 in North America ● Published - 48x year ● International Rate - $31,200 for 4 Color 1 page spread ($156,000 for 5 times) http://www.bloombergmedia.com/assets/pdfs/specs/BBG_Businessweek_2015rates_print.pdf http://images.bwbx.io/cms/2013-07-18/cover30_304inline.jpg As of Fall 2014 in North America Adult Readers Female Male 662 1,108 Median Age: 48 Avg Income: $106,324 Median Age: 50 Avg Income: $121,171 http://next.srds.com.ezproxy.lib.uconn.edu/nmp/datacard/show/38/4 BLOOMBERG BUSINESSWEEK Potential Ad Examples WALLSTREET JOURNAL ➢ Journal readers spent $21 billion on new vehicles in the past year ➢ Journal readers bought 639,750 vehicles in the past year ➢ average net worth of household : $2,161,200 ➢ median household income: $127,895 https://classifieds.wsj.com/ad/Car-Ads WALLSTREET JOURNAL Region : National Format : 8 columns x10” Region : North America amount : 3x $135,274.56 *Tax not included https://classifieds.wsj.com/ad/GetEstimate.jsp In-Stream Advertising through Youtube TrueView ● Ability to market to specific demographics ● Only pay when 30 online seconds or more of an ad is watched ($0.10 to $0.30 per view) slide about advertising : rahul ● Ads can be skipped, so uninterested viewers will not be disturbed google.com Unique way to advertise Sponsor a Buzzfeed article on electric cars and their significance on growing technology and helping the environment Cost: $20,000 digiday.com buzzfeed.com Experimenting with the corporate fleet Limited Release of AT&T Corporate Tesla Fleet Mobile marketing vehicle, highly recognizable brand association Easy performance monitoring, Seamless software adaptation Production and Servicing of 25 Fleet Vehicles Cost: $1.4M Auto shows & expos New York Paris Tokyo Shanghai Geneva Detroit Chicago Los Angeles Frankfurt Atlanta Combined 2014 attendance of over 7 million people for these events alone ● Major industry auto shows will provide Tesla with the opportunity to showcase the superior design and performance specs of our vehicles. This is exactly what makes the showroom experience so effective. ● Capacity to reach out to millions of car enthusiasts and spread the word at the average cost of $250,000 per showcase. Major auto industry show entrance fees are private, $250k is what we consider a safe estimate. Attendance data on each website. Budget Marketing strategy Rates per Amount Total Cost Economist $41,750 5x $208,750 Bloomberg $31,200 5x $156K WSJ $45,091.52 3x $135,274.51 Youtube (.1 to .3) $0.2 1K views $200 Buzzfeed $20K 2x $40K Auto Shows + Expos $250K 10x 2.5M AT&T Corporate Fleet $55K 25x 1.36M TOTAL: $4,400,224.51 - ads created, proposed, authorized and ready to be published by May 1st A.S. W A.S. Y Y W buzz A.S. B B A.S. buzz B B B A.S. A.S. W A.S. A.S. E E E E E A.S. Managing Personal Communications Direct Marketing Channels online ads Email newsletters Short video ads Company External Marketing Internal Marketing Employees Customer Relations Management : Marketing Strategies Interactive Marketing Customers http://my.teslamotors.com/forums Marketing & Sales Cooperation Marketers can use sales info to better place ads Sales force will have a more exact demographic due to the responses to ads Results in more sales and ultimate brand growth THE END