Tesla Motors uses two types of marketing channels to reach its consumers. It has a direct channel for internet sales and yet another direct channel for offline to reach offline customers. The internet channel sells directly to consumers who already know about the company and its vehicles and have already made up their mind about purchasing from the company. On the other hand, the direct channel for offline consumers is meant to attract and educate people who may not already know about the company’s vehicles. The company does not use any distributors or retailers to distribute its vehicles. Instead, it owns stores and galleries in high visibility retail venues from where it attracts, educates potential customers about its cars, and sells directly to them (Musk, 2012). The use of the two types of direct marketing channels would not change with the new target market. Instead, the two channels, particularly the offline direct channel, would be used aggressively to reach the baby boomers, who may already know about other brands but not about Tesla.The company uses the selective distribution strategy to distribute its vehicles to customers. It positions its store and gallery locations in high-traffic high-visibility retail venues such as malls and shopping streets. According to Reynolds (2013), Tesla’s presence in such high visibility areas helps attract the interest of many customers, some who may never have been interested n buying a car before interacting with the company’s showroom. The strategy allows the company to interact with potential consumers and educate them about its vehicles. The distribution intensity strategy would not change with the new target market, which comprises of baby boomers. The target market has been around for long and probably knows about other brands but not about Tesla. The strategy allows the company to reach the customers before they make their decision to buy cars (Musk, 2012). Therefore, it helps put the company on an equal competitive edge-footing with other companies. Change from the strategy would reduce the company’s ability to reach the target consumers.
As discussed in the marketing channels part of the essay, the company uses two types of direct channels, the internet and direct sales to offline customers, to distribute its cars. As such, it does not have intermediaries or any other members in its distribution chain. Therefore, the company performs most of the functions of a value chain by itself. For instance, it disseminates marketing communications and promotes its brand. Its presence in high visibility locations is a pull strategy aimed at creating demand for its cars. It also stores and manages its inventory. Most of its showrooms are small and may only hold a single vehicle due to space limitation (Reynolds, 2013). However, the company holds enough inventories of vehicles to avoid stock-outs and lost sales. The company also distributes its vehicles to ensure their availability to customers.
Tesla Motors uses the value-based strategy to price its cars. It focuses on providing customers with value for their money. For instance, the company sells its cars for 734,000 yuan in the Chinese market, which is an equivalent of $121,300. It focuses on treating its Chinese consumers in a similar manner to its US customers (Shirouzu, 2014). A change of pricing strategy would be recommended for the new target market. The company should take advantage of the main features of its cars to switch to a prestige pricing strategy, whereby it would use high prices to give the cars a high-quality image. Baby boomers are most likely to be enticed by the electric and luxury features of the cars. Additionally, they most of them have acquired sufficient wealth to pay for the high prices. The new pricing strategy would particularly be successful in the Chinese market where consumers have an affinity to purchase luxury products at high prices.
- Musk, E. (2012). The Tesla Approach to Distributing and Servicing Cars. Tesla. Retrieved from https://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars
- Reynolds, S. (2013). Why You Should Copy Tesla’s Way of Marketing. Forbes.com. Retrieved from http://www.forbes.com/sites/siimonreynolds/2013/09/01/why-you-should-copy-teslas-way-of-marketing/#59ef40543c51
- Shirouzu, N. (2014). Tesla Reveals Its Pricing Strategy For China. Business Insider. Retrieved from http://www.businessinsider.com/tesla-reveals-its-pricing-strategy-for-china-2014-1