The Tesla Model 3 is all electric, four –door compact sedan, which is designed and manufactured by the Tesla Motors. The model was introduced into the market on 31st March 2016. Initial production, as well as deliveries, are planned to occur at the end of 2017 (Teslamotors.com). Tesla Motors plans to sell this model in a couple of markets, such as Brazil, India, South Korea, Singapore, Ireland, and South Africa. The major specifications that the model is expected to have include supercharging capability, rear wheel drive, rear and front trucks, and a minimum of 215 miles range (Gold). Tesla expects to capture a large market due to the new specifications included in the new model. Additionally, the company expects to differentiate its market in a bid of achieving marketing segmentation. It is a major marketing strategy, which is aimed at countering the competition posed by other automobile companies like Mercedes, BMW, and Audi.
Market segmentation is a type of marketing strategy that entails dividing a broad market into some small subset of businesses, countries or consumers. In doing so, the segmentation is done on markets that either have or which are perceived to have some common needs, priorities, interests, and then designing as well as implementing strategies that target them (Balland, de Vaan and Boschma 14). Market segmentation strategies are used to identify and further define the targeted customers. Additionally, this also provides supporting data for marketing plans adopted by the company. Marketing positioning is also critical in achieving marketing objectives.
Market segmentation designed by Tesla Motors can take different forms like geographic segmentation, demographic segmentation, behavioral segmentation, occasional segmentation, cultural segmentation, segmentation by benefits, and behavioral segmentation. In geographic segmentation, Tesla marketers will create different markets from geographic regions, such as states, countries, regions, cities or even postal codes. Geographic marketing is very important, especially in cases where international marketing is needed, which applies to Tesla’s case. Tesla aims to sell the new model to countries like Britain. It can consider customizing this model to the British market to match the needs of consumers in this region. The Tesla Model 3 can also be differentiated from demographics, such as age, generations, sex, and education and occupation level (Fujimoto 45). In the differentiation based on sex, Tesla should consider producing certain models of Model 3 that have features that women or men love. For example, some colors are more appealing to women compared to men. Such differentiation allows the company to be divided into different markets that allow the marketing messages to be tailored accordingly to capture the individual needs of customers in different demographic brackets. Tesla Motors may also segment the market regarding the benefits sought by customers.
Given the Tesla’s industry life cycle, Tesla Model 3 is a right product offering. The consumers of this product are likely to be very receptive to this product. It owes to the fact that the features incorporated in the Tesla Model 3 meet the expectations of consumers (Gold). Its speed match the clients who love to ride on fast cars. The high-tech product incorporates the main features that excite clients who love to explore innovation. Consumers love electric cars since they are environmentally friendly and clean. It shows that the Model 3 will be the right product offering for these group of consumers. Ideally, consumers will tend to accept any product offering that incorporates the needs of the customers.
A strategic group is applied in strategic management. Companies within an industry that have similarly business models as well as similarly business combinations of strategies are grouped together. Ideally, the number of groups within a given industry as well as their composition depends on the dimensions that are used to define the groups. An organization should choose the direction to take to achieve its organizational goals (Balland, de Vaan & Boschma 14). Strategic group alliance aims at identifying organizations that have similar strategic characteristics, compete on the similar basis or follow similar strategies in their operations. In the automobile industry, there are a couple of strategic groups. Some characteristics that can be used to form strategic groups include the extent of product diversity, marketing efforts, and the kind of distribution channels used, pricing policy, the extent of geographic coverage, branding, and the degree of vertical integration. Strategic groups help companies in identifying strategic problems that may arise. Additionally, strategic group mapping also helps companies identify major business opportunities.
The major competitors for Tesla Motors include BMW, Mercedes and Audi. They serve the same kind of customers due to the same level of industry life cycle. Additionally, these companies are most likely to make use of the same kind of strategies in their marketing as well as their operations (Marcovici 56). The products offered by these companies incorporate the same kind of features. Mercedes, BMW, and Audi occupy the same strategic group as Tesla.
Once Tesla introduces the Tesla Model 3 in the market, other companies in the automobile industry are likely to introduce retaliatory measures, which are geared towards creating counter-marketing mechanisms. The competitive response by the members of those strategic groups will be geared towards capturing the same market that Tesla targets. Some of the competitive responses which can be offered by the rivals of Tesla include;
Offering Similar Products: The rivals of Tesla may produce the same products that incorporate the same features as those of Tesla Model 3. Similarly, the rivals may copy the production methods of Tesla, especially if the company does not use unique production measures. Companies in the auto industries are known to copy features of their rival companies. If BMW and Audi perceive that The Tesla Model 3 will take over their market share, they may be inclined to produce models that have almost similar features as the Model 3. It will be in an attempt of defending their market share.
Offering Lower Prices: Rival companies may also offer products at a lower price as compared to Tesla. They can do this by either forgoing part of the profits or by reducing the cost of production significantly. Most of the critics of Tesla’s products claim that they are too expensive for the normal consumers. It seems as if Tesla only targets the high net worth clients when it produces cars that are not affordable to the middle class and lower class market. The competitors can consider producing electric cars with similar features as Model X but offer it at a lower price. The market is likely to welcome this move since people love to save money and use the money saved to fund other critical activities in their lives.
Counter- Marketing Strategies: The rival companies of Tesla may also use marketing strategies as a way of countering its strategies. Since the companies are in the same strategic group, they are in a better position of modifying their marketing strategies to counter the strategies implemented by Tesla. Additionally, the rivals may also initiate strategies that are geared towards weakening the competition.
Auto Industry Occupied by Tesla
The automobile industry has many organizations that are involved in the design, manufacturing, development, marketing, selling, and distribution of motor vehicles. It is one of the most significant drivers of the world economy. However, this industry does not entail companies that are dedicated to the maintenance of the automobiles after their delivery to the end consumers (Fujimoto 45). The global automotive industry has been enjoying a period of relative strong profitability and growth. Annual sales have also been on the rise. However, the future of this industry is still uncertain, especially due to the rising competition in the industry. The auto industry has been propelled greatly by the current advancement in technology, which has enabled different companies to incorporate the latest trending features demanded by consumers (Marcovici 56). As a result, most of the auto companies are very optimistic about their markets. Different parts of the world have also witnessed the growth of a new economic class of people who are in a position to demand the latest trending vehicle models. Through this, these companies have been able to work towards incorporating the most important features in their models.
High tech industry is characterized by high levels of technological advancements. In such industries, technology is at the cutting edge and the most advanced technology available is incorporated into the products and services produced by the companies (Marcovici 72). Tesla is regarded as a high-tech company as it strives to incorporate the most advanced manufacturing technology in its car manufacturing operations. On the other hand, non-tech industries do not incorporate high levels of technology. The Tesla’s vehicles use high tech features such as utilizing automatic navigation systems. Such systems allow consumers to automatically reach at their intended destinations using the navigation system that this car has. Tesla also uses big data collected from the database of its users to introduce its new models and make improvements. It is a key characteristics of all high tech companies since big data drive their strategy. The use of electric energy to power its vehicles also shows it is a high tech company.
High-tech industries incorporate high levels of safety measures. Safety ensures people are protected from different types of danger, risk, and damage. In the automobile industry, safety ensures that operators and manufacturers do not face any significant risk or danger as a result of using motor vehicles or its spare parts. For the automobile themselves, safety means that there is no significant risk of damage. Safety in the automobile industry is very important. The extent to which companies incorporate safety in their products will influence the extent to which consumers gain satisfaction from the products offered to them (Marcovici 62). In doing so, the automobiles should comply with a certain number of regulations and norms. Tesla Motors occupies the high-tech auto industry segment. The segment is representative of the high-tech industries.
The changes in the auto industry are being driven by different factors. For instance, shifts in consumer demands have greatly changed the auto industry (Balland, de Vaan & Boschma 24). Consumers appear to be rethinking their love for individual automobile brands as well as viewing their cars as transportation machines. It has greatly affected the willingness of people to pay for the automobiles. The increasing availability of information and data has also been instrumental in driving the auto industry. As a result, consumers are now aware of the prices, specifications, performance, and quality they expect from the automobile products. The auto industry has also been driven largely by the ever-expanding regulatory requirements.
Balland, P.-A., M. De Vaan, and R. Boschma. "The Dynamics of Interfirm Networks along the Industry Life Cycle: The Case of the Global Video Game Industry, 1987-2007". Journal of Economic Geography 13.5 (2012): 741-765. Web.
Fujimoto, Takahiro. "The Long Tail of the Auto Industry Life Cycle". Journal of Product Innovation Management 31.1 (2013): 8-16. Web.
Gold, Aaron. "New Tesla Model 3: Price, Specs, Video And 2017 UK Release Date". Auto Express. N.p., 2016. Web. 6 Apr. 2016.
Marcovici, Michael. The Tesla Motors Way. Norderstedt: Books on Demand, 2013. Print.
Teslamotors.com. "Model 3 | Tesla Motors". Teslamotors.com. N.p., 2016. Web. 6 Apr. 2