Ashish Kumar [G15072]Gaurav Sahai [G15079]

Jyoti Gupta [G15085]Nitish Bhardwaj [G15095]

Pranav Mehrotra [G15099]

Tesla Motors - India Launch

Contents1. Define the product/competitor......................................................................................................4

1.1 Product....................................................................................................................................4

1.2 Competitors............................................................................................................................4

2. Analysis of Category.......................................................................................................................5

2.1 Aggregate Market factors.......................................................................................................5

2.2 Category Factors.....................................................................................................................7

2.3 Environmental Factors................................................................................................................8

2.3.1 Technological......................................................................................................................8

2.3.2 Political................................................................................................................................9

2.3.3 Economic.............................................................................................................................9

2.3.4 Social...................................................................................................................................9

2.3.5 Legal..................................................................................................................................10

3. Company and Competitor Analysis...............................................................................................10

3.1 Product Features Mix............................................................................................................10

3.2 Objective...............................................................................................................................12

3.3 Strategies..............................................................................................................................12

3.4 Marketing Mix Analysis.........................................................................................................13

3.5 Value Proposition..................................................................................................................14

4. Customer Analysis.........................................................................................................................16

4.1 Survey Questions..................................................................................................................16

4.1 Segmentation:.......................................................................................................................18

4.2 Targeting:..............................................................................................................................18

4.3 Positioning:...........................................................................................................................19

5. Assumptions in planning process..................................................................................................20

5.1 Market Potential...................................................................................................................20

5.2 Forecast Assumptions...........................................................................................................20

5.3 Other Assumptions:..............................................................................................................20

6. Objectives....................................................................................................................................21

i. Corporate Objectives (If appropriate).......................................................................................21

ii. Divisional Objectives (If appropriate)........................................................................................21

iii. Marketing Objectives................................................................................................................21

1. Volumes & Profits.................................................................................................................21

2. Time Frame...........................................................................................................................21

3. Customer Retention..............................................................................................................21

4. Intermediary Retention.........................................................................................................22

7. Strategy - Product.........................................................................................................................23

i. Customer Targets......................................................................................................................23

ii. Competitor Targets...................................................................................................................23

iii. Product / Service Features........................................................................................................24

iv. Core Strategy............................................................................................................................27

Value Proposition..................................................................................................................27

Product Positioning...............................................................................................................29

8. Strategy - Marketing Programmes................................................................................................31

i. Integrated Marketing Communications Programs....................................................................31

ii. Pricing Strategy.........................................................................................................................32

iii. Channel Strategy.......................................................................................................................33

iv. Customer Market Strategy........................................................................................................33

v. Research...................................................................................................................................34

8. Controls.........................................................................................................................................34

i. Financial markets......................................................................................................................34

ii. Marketing Metrics.....................................................................................................................35

9. Contingency Plans.........................................................................................................................36

8. Exhibit 1........................................................................................................................................37

1. Define the product/competitor

1.1 Product

Tesla Motors, Inc. is an American automotive and energy storage company that designs, manufactures, and sells electric cars, electric vehicle powertrain components, and battery products. Tesla first gained widespread attention following their production of the Tesla Roadster, the first fully electric sports car. The company's next two launches were the Model S, a fully electric luxury sedan, and Model X.

With India's proposed spending of $2-$2.3 billion for the development of electric charging infrastructure throughout the country over the next five years and Indian government’s plan to start National Electric Mobility Mission Plan to sell 6-7 million of electric vehicles in the country by 2020, India is seen as a potential emerging market for electric cars. Hence Tesla Motors Inc has decided to enter into the Indian Car Market through its model Tesla Model 3.

1.2 CompetitorsSince the Electric cars have not gained much acceptance in India so far, so conventionally only Bangalore based Reva, which is now part of Mahindra and Mahindra should have been the major competitor of Tesla Motor 3. However, Tesla Motor 3 would have to compete with not just Reva, but also with the conventional fuel powered cars in India. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model. Having said that Tesla Motor, with debut launch in India, is positioning itself on: 1.Brand 2. Luxury car 3.High-end motoring experience. Therefore major competitors for Tesla Motor3 would be BMW X1, Mercedes A class and Audi A3.

Brand Model PriceBMW X1 31.6 lakhsMercedes A-Class 29.2 lakhsAudi A3 25.3 lakhsHyundai Sonata 22.08 lakhsToyota Camry 24.77 lakhsVolvo S80 34.50 lakhsTesla Model 3 24 lakhs

2. Analysis of Category

2.1 Aggregate Market factors

1. Market Size: India is yet to take to electric / hybrid cars, probably because they are considered to be not only expensive to buy, but also to maintain. And when it comes to alternate fuels, customers have relied more on LPG and CNG instead of electric energy. However, that hasn't dampened the car manufacturers' hopes in India, as they have anyway gone ahead and introduced vehicles which are clean and green.

2. Growth: India's luxury car market has grown eight times in the last seven years from 4,000 units in 2007 to 33,000 units in 2014. The number is expected to hit 100,000 units by 2020.

Stage in Product Life Cycle: Tesla Motors, the world's most successful electric car maker, plans to enter the Indian market with its upcoming sedan that will be priced at less than half of its existing model. The product is expected to be launched in first quarter 2016.

The product is still in Introduction Phase

3. Profits: Tesla Motors Historical Gross Profit Margin (Quarterly) Data [in US Market]. The company is expected to follow the same profit margin in India.

Data for this date range Profit Margin (in %)

Sept 30, 2014 29.57%

June 30. 2014 27.69%

March 31, 2014 25.00%

Dec 31, 2014 25.45%

The Indian government is planning to start National Electric Mobility Mission Plan, where it plans to sell 6-7 million of electric vehicles in the country by 2020. It is aimed at providing incentives to the tune of about Rs 14,000 crore for promotion of cleaner electric vehicle technologies with the aim of saving 2.2-2.5 million tons of fuel by the end of this decade. The policy is yet to be approved and implemented. India has one of the highest import duties in the world - in excess of 100%. This might be a reason for decline in profit margins.

2.2 Category Factors

Porter Five Forces analysis for Tesla Motors is as follows:

1. Threat of New Entrants : LOW

2. Bargaining Power of Buyers : LOW3. Bargaining Power of Suppliers : MEDIUM4. Pressures from Substitutes : MEDIUM5. Current rivalry in category : LOW

Category Capacity: The target customers are between 30 and 50 years of age that are considered financially well off. Tesla uses advanced technology in making its electric vehicles. This technologyCauses the vehicles more expensive than regular gas powered vehicles.

Please refer to the Porter Five Forces analysis for more details

2.3 Environmental Factors

2.3.1 Technological

Tesla Motor’s key technology is the 100% electric power train. They developed 1st fully electric sports car “The Roadster” Drive innovation in battery technology. Ability to develop vehicles completely in house.

Competitive Rivalry: LOW1. Niche sector2. High Entry Barrier3. No electric Vehicle in luxury

category

Competitive Rivalry within industry : LOW

Threat of New Entrants : LOW1. High Entry Barriers : Capital

Intensive2. Auto OEM working with

conventional technologies

Threat of Substitution: MEDIUM

1. Fuel Technology : Clean Diesel, Fuel Cell, Bio-Cell, Hydrogen

2. Can be easily substituted with diesel engine

Bargaining Power of Suppliers : MEDIUM

1. Self-reliant in Engine, Chassis, transmission &Engineering

2. Supplier Dependency : Li-on Cells

Bargaining Power of Buyers : LOW

1. Geographically dispersed customers2. Not many alternatives available in the

segment

Lead in development of infrastructure of electric vehicle (EVs) and license it to other play.

Strong technological expertise in the area of electric transmissions. Also a strong supplier to other manufacturers like Toyota

2.3.2 Political

• Reva, India’s first commercial electric car that has been around for over a decade, didn’t find many takers, selling fewer than 500 cars a year.

• Indian market presents its own inherent problems for Tesla, including an unreliable electrical infrastructure, a small fraction of the charging stations, and a population that by and large can’t even afford the cheapest car.

• To facilitate growth, The Indian government is trying to promote the use of electric vehicles with its National Electric Mobility Mission Plan 2020, under which it plans to invest Rs14,000 crore ($2.25 billion) to build the infrastructure required for electric vehicles.

• A key metric would be how customers adopt to this product initially in India given its high entry cost between $30,000 to $40,000.

• Large International market potential given its eco-friendly products.

2.3.3 Economic

Tesla is a high-end luxury car so demand might be somewhat constrained initially and be similar to other luxury cars.

Price of the traditional lead-acid batteries in India is around Rs 5,000 per kWh. Recently launched Tesla “Powerwall”, a lithium-ion energy storage system for the residential market, according to a rough calculation would work out to Rs 22,000 per kWh.

2.3.4 Social

As fuel prices remain high and there is greater concern for the environment, more energy efficient cars are increasing in demand.

Increase in environmental consciousness of consumers (green/eco) products. Tesla vehicles produce zero emission.

2.3.5 Legal

India has one of the highest import duty in the world — in excess of 100% — that goes against Tesla principal of importing car directly from its plants at Freemont in the US or the assembly unit in Netherlands

Promotion of new technologies and changes in energy policies by Indian Government.

Tesla Motors Product Portfolio

3. Company and Competitor Analysis

3.1 Product Features MixCharging

Free long distance travel using Tesla’s Supercharger network Mobile connector with 110 volt, 240 volt, and J1772 adapters

Interior

17” capacitive touch screen with digital instrument cluster Onboard maps and navigation with free updates for 7 years Automatic keyless entry Wi-Fi and Internet connectivity Mobile app remote control Automatic Xenon headlights

The Roadster was Tesla’s first model and was sold before 2012.

Model-S deliveries began in 2012.

Model-X deliveries are expected to begin later this year.

Retracting door handles One touch power windows High definition backup camera Rain sensing automatic windshield wipers GPS enabled Home link Hands free talking with Bluetooth Voice activated controls AM, FM, and Internet streaming radio Available Ultra High Fidelity Sound package with XM radio support Electro chromatic mirrors Power folding, heated side mirrors with memory Two USB ports for media and power 12 volt power outlet Twelve way power adjustable, heated front seats with memory and driver profile Available subzero weather package with heated rear seats and wiper blade and

windshield washer fluid defrosters

Safety

Daytime running lights Available Smart Air Suspension for raising and lowering ride height Eight airbags for driver and passenger heads, knees, and pelvis plus two side curtain

airbags Electronic stability and traction control Four wheel antilock disc brakes with electronic parking brake Automatic emergency braking Blind spot warning Lane departure warning Parking sensors Speed limit display Titanium underbody shield and aluminum deflector plates Autopilot Convenience Features add Traffic-aware cruise control Automatic lane centering Self-parking Automatic high/low beam headlights Premium Interior and

Lighting adds

Fit and finish refinements, including the use of higher quality materials and ambient lighting

Power lift gate.

Fog and cornering lights Lighted door handles Interior accent lighting

3.2 ObjectiveTesla Motors designs and sells high-performance, highly efficient electric all kind of cars — with no compromises. Tesla Motors cars combine style, acceleration, and handling with advanced technologies that make them among the quickest and the most energy-efficient cars on the road.

Tesla mission statement is “Zero Emissions. Zero Compromises”.

Tesla’s mission is to accelerate the world’s transition to sustainable transport.

3.3 StrategiesCorporate Strategies

Growth Strategy: Market Development An effective idea for growth is entering new markets. If you have access to more customers, you can sell more products and at the same time concentrating on its primary line of business. You can target new markets by opening additional retail locations, adding an online presence, selling internationally or reaching new types of customers. Tesla should keep focusing on its Niche segment as the current status but expand in different markets such as Europe & Asia in order to increase revenues. Expansion in new markets avoids the fierce competition in USA. As an example, in 2012, the Chinese bought over 19 million vehicles, while the U.S. market only bought 14 million. China is already the world's largest auto market and it's set to grow even bigger in coming years. Chinese central planners have said that they want to have 5 million electric cars on the road there by 2020. That's only seven years away. It currently has facilities in the United States and throughout Europe where parts are being manufactured and assembled. Since they have limited resources, you must be very selective of the location for its expansion

Advantages Organization becomes pioneer at its specialization Build Brand Name Globally This not only affects sales through name recognition, but also helps recruit local employees, sign on new distributors and work with media in each country as part of the overall marketing efforts. Increase sales and thus revenues.

Product Development: - Tesla could benefit from its strong R&D department and focus on innovating new cars to target a wider range of customers. If the strategy is properly implemented, Tesla can gain a reputation as a company that is on the leading edge of EV industry. This can help capture more market share and create an expectation of exciting ideas among its customers. In details, Tesla motors should produce different types of electric

cars like 4x4, hutch back or sports cars not only the existing type, as Tesla is currently suffering from number of units sold and sales so we have to diversify the products just to increase the sales and brand recognition as it will get to more customers which have different tastes. So it can be named with different names like model X which will be introduced in late 2014. Advantages: Creates Value. When a company uses a differentiation strategy that focuses on the cost value of the product versus other similar products on the market, it creates a perceived value among consumers and potential customers. Increase Brand Awareness. Increase number of customers and accordingly Consumer Loyalty. Provide a competitive advantage especially in the automotive market which dominated by larger companies. Having multiple product lines may allow a growing business to diversify risk and capitalize on its established reputation and can attract buyers with different preferences, increase profitability thanks to market segmentation and, for some businesses, even out seasonal sales patterns Compete more broadly in your industry. Disadvantages: Different Competitors will be added to current competition.

3.4 Marketing Mix Analysis

4P’s of Tesla Motor are:

Product: Tesla Motor

The fully electric car which is expected to be competing with the conventional fuel powered cars.

Made of steel Unique design and distinctive style Range of 200 miles (320 km) on a single electric charge. Expected to offer straight line performance of around 0-62mph in 4.1 seconds. Added advantage of a cheaper battery thanks to Tesla’s forthcoming

Gigafactory. Aimed for providing a full-scale motoring experience Environment friendly High performance Efficient path to a sustainable energy future

Price: Tesla Motor

US$35,000 starting price(Rs 18 Lakh-25lakh) Affordable lower end of the luxury segment Three step strategy to start at high price and moving progressively towards

lower cost.

Promotion: Tesla Motor

Auto-expo and other special events Sponsoring high profile events and campaigns Innovative programs / campaigns like offering qualifying customers an

opportunity to trade in their current vehicle for new Tesla Motor. Discounts on pre-bookings Celebrity endorsements Integrated marketing campaign with full page newspaper advertisements and

on social media. Billboard campaigns Google Ad-words

Place: Tesla Motor

Differentiated selling strategy Online/Website booking of a car without having to go to a dealer Company owned stores to sell cars

These 4P’s translates into the following key value proposition for customers:

3.5 Value Proposition Energy efficient High Performance Unique style and design Un-paralleled motoring experience High power Sustainable transport First of its kind Brand value Affordable in lower end of luxury segment Highly customized purchase of cars as consumer can specify their choices online No hidden costs because of direct distribution Free long distance travel as free charging available at supercharger station

Customer Decision Map for Tesla Motor:

4. Customer Analysis

4.1 Survey QuestionsRefer to Exhibit 1 for Survey Questions

Cluster Analysis:

Based on the survey questions and responses from the consumers, we fed these inputs to SPSS and applied k-means clustering to arrive at the following results (Refer to Exhibit 2 attached in Appendix):

4.1 Segmentation:Market segment for Tesla Motor3 can be factored based on three categories: eco-friendly consumers, tech savvy and entry level luxury cars. For the eco-friendly consumer, Tesla motors would be able to reach them by offering a fully electric car that not just provides them with an alternative clean source of energy, but also has style and performance like fuel powered cars. For the tech savvy segment, Tesla Motor is providing a fully electric car, which is a growing and futuristic technology. The entry level luxury car segment will attract the professionals and businessman who want to drive a luxury car. Ideally, more males will be inclined to purchase the vehicles, so majority of the segment will be male.

4.2 Targeting: The target market for Tesla Motor3 will be professionals, mostly males looking for entry level luxury car. Thus target market will comprise of late 20’s to early 50’s middle, upper or affluent class working adults. Which constitute around approximately 2% of India’s population.

4.3 Positioning:Tesla motor 3 would be positioned as an entry level luxury car that has the added benefit of being fully electric, while not losing on performance. Since Tesla Motors is known for its high performance innovative products and great designs, so Tesla motor 3, launched as an entry level luxury car would be perceived as a brand, that provides the double benefits of luxury and zero emissions, but does not compromise on its style and performance. By providing these benefits, it would position itself as a brand that would save consumers more money than the traditional entry level luxury cars.

5. Assumptions in planning process

5.1 Market PotentialIndia is considered to as a huge potential market. India has tons of wealthy people willing to spend top dollar for top end and refined vehicles that are indicative of their status in the society. The only luxury vehicles you get in India are a bunch of those agricultural Mercedes’, Audi's and BMW's almost all of which run on those farm grade noisy inefficient Diesel engines.

If Tesla motors wants to have a global presence, India is one of the right places to start in Asia. The Indian subcontinent has lots of rich people who love supercars and know their lot about them. Also with Growth Rate Pegged at 7.5 % for the FY 2015 To 2016 we think it would not be a bad place to invest in.

5.2 Forecast Assumptions Petrol prices will remain to be on higher end. Government and people will prefer eco-friendly car. There is sufficient electricity produced in India to support charging of cars and

changing points can be easily made.

5.3 Other Assumptions: It is assumed that Indians absolutely love the Model S and are more than willing to

buy it rather than a gas guzzler. The decrease in the prize of gasoline will not affect the buying choices of people. It is

assumed that people would still prefer an electric car. Tesla will get exemption from the Indian government on customs duty because it is

an electric and eco-friendly car. Rich people are willing to substitute their gas guzzlers with Tesla’s electric cars.

6. Objectives

i. Corporate Objectives (If appropriate)

To build a more affordable car suitable to the needs of Indian customer. To accelerate the advent of sustainable transport by bringing compelling mass market electric

cars to Indian market as soon as possible. To expand market geographically. Provide zero emission electric power generation options. To build its own Mobile Service Unit. Achieving Operating Efficiencies, better control over costs. Better safety track record.

ii. Divisional Objectives (If appropriate)

Infrastructure Division : Build a broad network of charging stations for all electric vehicles R&D Division : Sell patented electric power train components to other automakers

iii. Marketing Objectives

1. Volumes & Profits

The Indian government has been planning to start National Electric Mobility Mission Plan, where it plans to sell 6-7 million of electric vehicles in the country by 2020. Tesla is eyeing for these volumes. The government aims at providing incentives to the tune of about Rs 14,000 crore for promotion of cleaner electric vehicle technologies with the aim of saving 2.2-2.5 million tons of fuel by the end of this decade. The policy is yet to be approved and implemented. 

2. Time Frame

Tesla Motor is planning to launch its entry-level sedan - Model 3 in India in March, 2016, and that it will cost around $35,000 (Rs. 23 lakhs). It is not clear from when Tesla motor will start its marketing campaign in India, but we are expecting it will start in Q4 of financial year 2015 -2016.

3. Customer RetentionAs Tesla will be launched in India for the first time to it becomes all the more important for them to retain first buyer because they would in turn do word of mouth marketing for Tesla. For this reason we have to do following things:

Personal customer experience that will create customer loyalty. Truly engaged workers – inspired by where the company is headed and are

motivated to share that passion with customers by delivering great customer service and interaction.

Appreciate clients/customers. Thank you notes, thank you gifts for on boarding new clients and/or discounts to your most loyal customers can speak volumes. Recognition on social media for our most loyal customers can be valuable.

Welcome and ask for constructive feedback. Don’t wait for negative feedback to come. Be proactive

4. Intermediary RetentionIntermediary are the most important part of Supply Chain Management. We if can develop good intermediaries relation then that would do wonders for our business like it will reduce the time for final delivery of Tesla cars to retail stores. We will use following strategies to improve intermediary relations:

Offer discounts to our intermediaries. Pay the fees in advance. Take their opinion in product marketing so that they feel more involved. Give then payments higher than the existing car companies.

7. Strategy - Product

i. Customer Targets

The target customers are between 30 and 50 years of age that are considered financially well off. Tesla uses advanced technology in making its electric vehicles. This technology causes the vehicles more expensive than regular gas powered vehicles. Speed and design also plays a factor in the price because the Tesla Roadster is considered an "exotic" car and the Tesla Model S is considered a luxury sedan. These types of vehicles are typically purchased by those that can afford such luxuries.

The target group comprises of Innovators and early adopters of technology. These guys are willing to take risks, have the highest social status, have financial liquidity, are social and have closest contact to scientific sources and interaction with other innovators. Their risk tolerance allows them to adopt technologies that may ultimately fail. Financial resources help absorb these failures. The electric vehicle market is currently growing in the automotive industry. Many companies are researching into creating a better electric vehicle that can travel at a greater range and with more speed and power. The rising cost of oil and other non-energies has increased the search for alternative ways to power a vehicle, which has helped grow the electric vehicle market. Bringing wind generator technology to the market will greatly enhance the uses for electric vehicles by not using regular fuels and as much electricity from power plants. Once on the market, this technology will continue to grow rapidly.

ii. Competitor TargetsTesla´s central competitive advantage is the low cost of Tesla’s battery pack, which allow to sell the Model S at a reasonable price but with a near-normal (up to) 300 mile range, a combination other EVs have yet to deliver. Tesla Model s battery pack costs will be at/below Rs 19500/kWh, well below from other OEMs/battery makers (Rs32500-39000/kWh for 2011-2012 timeframe, and Rs 24375-32500/kWh mid-decade target)

A key source of Tesla’s cost advantage is its ability to apply commoditized small cylindrical lithium cells (used in consumer electronics) to a car via proprietary thermal/power management.

It also has a comprehensive, proprietary technology with 40 patents awarded & over 200 patent applications pending

Targets:

Tesla should improve brand awareness in India before entering the market. This will neutralize the pedigree of the already existing players.

Tesla’s price is lower than that of its competitor so this should give them an advantage. Tesla should launch their car in the range of Rs 18-20 lakhs to gain competitive advantage.

Technology wise Tesla is equal or better than its competitors so they should market this while creating brand awareness in India.

Tesla should not go on a price war with its competitors instead it should highlight its technology and Eco friendliness while marketing itself.

iii. Product / Service FeaturesIf we draw a map to study competitive advantage for Tesla motors till now, we find that Tesla Motors considers Technology, Service and Support as its major points of Competitive Advantage.

Product features of Tesla Motor 3 would be:

Please refer to Exhibit 3 for Product Features

Service Strategy:

“The best way to experience service is, of course, not to experience service. “

Since Tesla is going to launch itself in India through Tesla Model 3, hence Tesla should aim on providing the best world best service and Warranty programs. Tesla should focus on the following strategies for capturing the market:

1. Free Valet Service: Customer’s time is valuable and should not be spent driving to or waiting at service centers. Tesla is putting in place a valet service, so that customer’s car is seamlessly picked up and replaced with a loaner and then returned as soon as servicing is done. There is no additional charge for this.

2. Providing Periodic Software Updates: Tesla Model 3 would provide periodic updates and when an update is released, user should be notified on the screen of the car.

3. Facilitate addition of New Features: Through software updates, it would be possible to upgrade Model 3 with new features as and when required.

4. Annual Service should cover Annual Inspection, Replacement parts, System Monitoring and Remote Diagnostics.

5. Free Service up to 3 appointments: – Free Service of specially-trained technician should be provided and the technicians can be called to come to home, office, school, or any location of choice to perform Tesla Service.

Tesla has a comprehensive, proprietary technology with 40 patents awarded and over 200 patent applications pending.

6. Choice of Purchasing Service plan or Pay Per appointment: Customer would not be required to purchase a Tesla Service Plan and has the choice of paying for annual service or pay for inspection per each appointment at service center, after 3 appointments have expired. Tesla Service Plans are simply prepaying at a discount for your annual inspections.

7. Extended Warranty available: Tesla Motor would give the option of extended warranty to users and coverage would last for four years or 50,000 miles, whichever comes first, and begins on the date the original warranty expires. 

8. Free Transfer of Warranty to New Users: User can transfer Vehicle Warranty at no cost to the new owner, in case they are selling the Tesla vehicle.

9. Provision of New Vehicle Limited Warranty: New Vehicle Limited Warranty would include the Basic Vehicle Limited Warranty, the Supplemental Restraint System (“SRS”) Limited Warranty, and the Battery Limited Warranty.

10. Battery Warranty - Except in the cases of a collision, all damage would be covered by warranty. The battery will be replaced at no cost by a factory reconditioned unit with an energy capacity equal to or better than the original pack before the failure occurred.

iv. Core Strategy

Value Proposition

With instant torque, incredible power, and zero emissions, Tesla’s products would be cars without compromise. Each new generation would be increasingly affordable, helping the company work towards its mission: to accelerate the world’s transition to sustainable transport.

Tesla is not just an automaker, but also a technology and design company with a focus on energy innovation.

Automobile companies play on price or choose to offer an exquisite product. The automobile industry has a mix of players offering both propositions to the customers. While Ford and General Motors largely seek to cater to the mass market segment, luxury brands such as Jaguar Land Rover, serve the top end of the market. So far Tesla has sold more than 50,000 vehicles worldwide.

EV / Hybrid units sold in 2014

Vehicle performance

The Tesla Roadster, which is released in 2008, changed people’s imagination on EV by offering a fancy looking sport car with offering a 0-100km/h within 3.7s acceleration and a standard range of 393km for one time charge. Following by this, Tesla motor released Tesla model S in 2012, with purpose design for a premium family car. It has several different sub-type with acceleration performance varies from 3.2s to 5.9s for 0-100km/h acceleration, and the standard range varies from 335km to 426km for one time charge.

Style

Tesla clearly wants to make the vehicle "pop." Design is incredibly important to the U.S.-based young auto company, and Tesla wants to hit a home run on that front with the Model X. Radical styling undoubtedly begins with its "falcon wing" doors. Tesla CEO once said “Tesla is taking a no-compromise approach to the design, insisting that the production version of the SUV will blow people away."

Safety

Model S is designed from the ground up to be the safest car on the road, as proven by a 5-star rating in all categories of the National Highway Traffic Safety Administration (NHTSA) crash test. Much of its safety is owed to the unique electric drive train that sits beneath the car’s aluminum occupant cell in its own sub frame. This unique positioning lowers the car’s center of gravity, which improves handling and minimizes rollover risk, and replaces the heavy engine block with impact absorbing boron steel rails.

Side impacts are met by aluminum pillars reinforced with steel rails to reduce intrusion, protecting occupants and the battery pack while improving roof stiffness. In the event of an accident, eight airbags protect front and rear occupants, and the battery system automatically disconnects the main power source. Should the worst happen, there is no safer car to be in than Model S.

Product PositioningTesla’s will target niche luxury electric car market segment and its main product is a sports car, their target market consist mainly of the male sex. The most obvious positioning attributes will be the environmental impact and stunning performance. For example, the car will accelerate 0-60 MPH in under four seconds. Tesla is industry Leader and pioneer in battery and electric engine technology.

Due to their currently high price point these males must be business-men who have yearly disposable incomes of possibly $50,000 and higher. Tesla’s is marketed to consumers who enjoy traveling via their vehicles. Its numerous claims of weather vehicle clearly illustrate this lifestyle of its consumers. The males included in this target market live stylish lives, are car enthusiast, and follow trends, such as going green.

8. Strategy - Marketing Programmes

i. Integrated Marketing Communications ProgramsWe will focus on online sales so site traffic begins to be a major concern. Increasing site traffic is essential to the overall health of the company. Our communication strategy concentrates on three main media sources; Google’s Ad Words, major newspapers/ magazines, social media outlets and company sponsored events. These strategies will increase customer traffic which ultimately will lead to an increase of revenue.

Website and Social Media

The Tesla Motors website will be the main hub of all announcements and advertisements. We will announce the new car, promote the campaigns, and give complete details through our website directly. We will also use our Social Media platforms to make announcements and promote our events taking place. All ads would be on the homepage of each website, giving it maximum exposure to those who enter the site through other channels.

Google Advertising

To help promote Tesla on the internet, we will use targeted advertising through Google Ad Words. The targeted advertising would be focused on those who are looking at electric vehicles or hybrid cars. Google’s Ad Words is a Pay-Per-Click advertising model that allows a company to advertise online. Tesla will use Google’s specialized program to increase site traffic. Pay-Per Click is a program that Google offers allowing Tesla to set a predetermined advertising budget based on the amount of consumers visiting our website. Each click will lead the potential consumer to www.teslamotors.com. This strategy also has a secondary

Tesla’s main form of communications with its consumers is through its extensive website.

Teslamotors.com includes everything from all of Tesla’s vehicle specs to each of its appearances in the press and magazines. Magazine articles have also been a successful form of communication globally for Tesla. Many of the surveys showed that Magazine articles were the most popular way in which consumers have heard of Tesla Motors.

effect on Tesla. As each individual visits the site, this can grow brand awareness resulting in an increase of overall sales. The program offers real time conversion rate tracking that will let us determine the effectiveness of the program. By choosing our specific goal, defining keywords that Tesla is associated with and setting a budget can achieve a conversion rate averaging around 4.29% to 6.15% for the auto industry. With 1,000 potential customers visiting the site at a 6.15% conversion rate can result in 62 new customers. This strategy can have limitless possibilities depending on our total budget set aside for the program.

Media

Newspapers will be used to reach a certain demographic area that will increase site traffic. Times of India, Hindustan Times, The Hindu, The Economic Times and Auto Car magazine will be used. These magazines focus on college graduates with a median age of 40 plus and an average household income of over Rs.20, 00,000. Through each magazine, a one page ad with no contracts involved and a onetime ad will cost us at the low of Rs. 9, 00,000 and a high of Rs.60, 00,000 for ads. With an audience of roughly 1.2billion Tesla can use this media to further our brand awareness and increase site traffic at a fairly inexpensive price.

We will also launch a billboard campaign to coincide with the launch of the new car. The billboards will be used in before the Test Drive India Campaign. The billboard campaign will launch in the 4 metropolitan cities that the Test Drive India Campaign visits as pilot cities.

Only a few billboards will be placed in each city to maximize exposure across the India with our full budget being expensed.

Our department will also reach out to major sources of online media to help gain exposure for the car. The online media companies will have an opportunity to test drive the car, much like the Test Drive India plan, and offer their reviews. These reviews will help us gain exposure for the car and give the car-shopping consumer more information from a third party source, helping to verify the Tesla marketing campaigns. It will also give us an opportunity to announce when and where our next “Test Drive India” dates will be, encouraging others to come and drive the car for themselves.

ii. Pricing StrategyFlexible Price

Tesla Model S was launched with a one price across US. Tesla is planning to launch same product in India in 2016. Flexible Price model would be followed in India.

Skimming Price

Tesla will also follow Price skimming as a pricing strategy in which it will set a relatively high price for a Model S ‘Performance model’ at first than the base model of Model S, then will lowers the price over time. The objective of a price skimming strategy is to capture the consumer surplus. If this is done successfully, then theoretically no customer will pay less for the product than the maximum they are willing to pay. Tesla Motor will continue to invest in R&D sector to improve the quality of rechargeable battery technologies and this investment comes from number of high profile investors and government support. Hence, more improvement they make in terms of technological innovation and incorporate them in Electric Vehicle like Model S, it will help to lower introductory base price gradually in consumer market.

Penetration Price

Penetration pricing is not applicable for Tesla Model S. This pricing model is applicable when a Company is trying to make profit in the short term, set a low price at the first launch of a product and continue to increase the price after certain timeline to make more profit. Tesla Motor’s goal is to get a long term market share and continue to improve quality in EV sector, especially in battery technology. Hence initial base price of the Model S car will come down gradually, making the product affordable to consumer space. Penetration pricing strategy will not be applicable for Model S.

iii. Channel Strategy

A channel strategy is a vendor's plan for moving a product or a service through the chain of commerce to the end customer. Product manufacturers and service providers face a number of channel options.

To start with, Tesla will go with the traditional channel strategy - making use of authorized distributorship only in India because a multi-channel sales strategy in Automotive involves a number of challenges, both for the design of the sales processes as well as for customer satisfaction surveys. “Customer Experience Management” needs some kind of re-design.

iv. Customer Market Strategy

The essential elements of a customer management strategy are:

1. Managing Relationships

Tesla reaches out its customer in three different ways (a) online booking - Tesla is pursuing a differentiated selling strategy for its cars. It lets buyers book a car online, without having to visit any of the dealers. (b) Company Owned Stores - the brick-and-mortar stores serve as a channel to promote the electric vehicle concept as well as its own brand. According to Tesla, the “product specialists” at its stores are not on commission. This means that they differ from the ordinary auto

salesman, whose sole aim is to sell the vehicle. (c) Tesla also offers a test drive to its potential customers. This also acts as a customer contact point for Tesla.

2. Creating Opportunities

Tesla opens its showrooms in shopping malls instead of opening a big showroom located along main roads like every other car dealer, they are in shopping malls – right alongside brands like Zara, Macys, etc. Secondly the showrooms are only the size of a small shop, often only squeezing in a single vehicle into the space. This radical departure from car marketing norms completely changes the traditional customer math.

Most cars dealerships would be lucky to get a hundred potential customers perusing the cars on their lot each day. But because of their location, Tesla gets tens of thousands of people walking right past their car, every single day.

v. ResearchIn Elon Musk’s own words Tesla’s long term plan is “To build a wide range of models, including affordably priced family cars. This is because the overarching purpose of Tesla is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which is believed to be the primary, but not exclusive, sustainable solution.”

The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model. To achieve this objective, all free cash flow should be plowed back into R&D to drive down the costs and bring new affordable to market as fast as possible. Hence, Tesla’s Model 3 is priced around 18-24 lakhs which is around 26 lakhs reduction from its previous model –Model S. So Tesla’s strategy should be to spend more R&D dollars to drive this goal. Main challenge for Tesla would be to keep eye popping performance at much lower prices. The rule of thumb is that it takes anywhere from $1 billion to $3 billion to develop a major new car model. At Tesla's current R&D burn rate, it should therefore bring out a new car every three to nine years.

8. Controls

i. Financial marketsAs suggested, Tesla could run “Test Drive Tesla” programs throughout the country to attract potential customers by working on the mental palpability of the experience of driving an electric car which gives an eye popping performance equivalent to that of Mercedes or Audi. Tesla can go for running this test drive program twice in a year before the launch, at a total cost of around Rs 2 Crores or 20 million. During the same phase Tesla can start the “Loyalty programs” too, whose cost should be limited to around 10% of the sales that year. Tesla can also employ a right mix of cars with 40KWh battery and cars with 60 KWh battery by evenly distributing the numbers between the two variants.

Tesla can late on increase the production of cars in 40KWh and 60KWh category in next two years, maintaining the same ratio between the two variants as this year. However, with increase in the production of number of cars, cost of Loyalty programs will also increase next year as they are directly linked to the sales. Based on the response generated for the Tesla Model 3, it can later decide whether or not to increase the production of cars or to launch a newer, affordable version of the car, ratio between the 40KWh and 60KWh battery variants and the budget to be spent on Test Drive Tesla and Loyalty Programs.

ii. Marketing MetricsTesla motors will use the following marketing metrics in India to start with.

Channel-Specific Traffic. Found in the “Acquisition” section of Google Analytics, the channel-specific metrics will segment the traffic based on their point of origin. This is especially useful for a full-scale digital marketing campaign because “total visits” can’t give you an indication of which channels are outperforming the others. The four main channels to keep an eye on are:

1. “direct,” which will tell how many people visited the site directly;

2. “referrals,” which include external links from other sites;

3. “organic,” which includes visitors who found "Tesla" after performing a search, and;

4. “social,” which includes visitors who found "Tesla" through social media. It’s an excellent way to gauge the strengths, social media marketing, content marketing, and traditional marketing campaigns.

5. Total Conversions. Total conversions is one of the most important metrics for measuring the profitability of overall marketing efforts. It measures the number of customers who visited the showroom and the number of customers who actually converted into sales.

6. Lead to Close Ratio. This is less a measure of the marketing efforts and more a measure of sales success, but it’s important to understand in the context of total return on investment. Without an efficient and successful sales follow-up, any leads one gets from marketing could be useless. This metric is easy to define: simply divide the total number of sales by your total number of leads, and one get a ratio that defines the sales success independent of marketing efforts. If the close rate is low, any drop in revenue or overspending could merely be a symptom of inefficient final sales strategies.

8. Customer Value. It is going to be helpful in determining the overall return on investment. It can also be useful in setting annual company goals. To find the average customer value, we have to take into account all sales the average customer will initiate over the course of the customer relationship.

9. Contingency PlansTesla faces many challenges as a new entry motor company in a very competitive Indian auto industry. We know what Tesla does best, "builds great fully electric car without the sacrifice of performance or style". Tesla is seen by many as cool "techy" innovative company but no one is persuaded enough to come out and purchase at its price tag. Recharge time of car at home and highway would be differentiating factor for user overall experience with an electric vehicle.

One of top drawback of Tesla is high initial cost associated with purchasing. The new model, Gen 3, reduces the initial cost for ownership of an electric car.

Already successful programs like "Loyalty Program", "Amplify Your Ride" & "Test Drive Tesla" in US can be used in Indian market as well as contingency to boost sales figures.

In March of 2013, Tesla was in a dire situation: the company was nearly bankrupt, its electric vehicles failing to connect with buyers. Elon Musk, CEO of Tesla, had a contingency plan: cash out with Google.

As Tesla was on the downward slope, Elon Musk turned to his friend Larry Page, suggesting Google buy the company, plus $5 billion in factory expenses. Tesla was worth $6 billion at the time. Musk also reportedly asked Page to guarantee him either another eight years running the company, or enough time to produce a third-generation, mainstream electric car. Page reportedly "accepted the overall proposal and shook on the deal."

As we know, the deal never went anywhere. Tesla turned around from the edge of bankruptcy. The company ended up posting a profit in the next few weeks, and even paid back its debts to the Department of Energy. Musk reportedly broke off the deal with Google soon after.

8. Exhibit 1 - Survey Questions

9. Exhibit 2 - Cluster Analysis

10. Exhibit 3 - Product Features