MARKETING
MANAGEMENT GROUP
PROJECT
Tesla: Model 3
Liberty University
Dennie, Michael; Drake, Katherine; Grindstaff, Garrett; Olinger,
Rebecca; Pacholski, Amanda
Abstract
Group Four chose to research the Tesla Model 3 to analyze the marketing management of the
organization and specific vehicle model. Tesla Motors, Inc. is an American company that designs,
engineers and manufactures energy-forward vehicles. Tesla sells electric cars, electric powertrain
parts, and battery products. Before 2016, the company had two models on the road: the Model X
and the Model S. In 2016, Tesla launched a third vehicle to their line, the Model 3. Group Four
articulates the marketing strategy and management required to successfully manufacture the
Model 3 Product.
Group Four
MMGP: GROUP 4
Table of Contents
Introduction....................................................................................................................................4
Old 4 Ps: Product, Place, Promotion, Price.........................................................................................4
Product................................................................................................................................................4
Price....................................................................................................................................................5
Place...................................................................................................................................................5
Promotion...........................................................................................................................................6
New 4 Ps: People Processes Programs Performance..........................................................................7
People.................................................................................................................................................7
Processes.............................................................................................................................................7
Performance........................................................................................................................................8
Programs.............................................................................................................................................8
Scanning the Market Environment..............................................................................................9
Demographic Trends of Tesla Model 3.................................................................................................9
Influence of Economic Trends on Tesla Model 3...............................................................................10
Technological Changes and Consumer of Acceptance......................................................................11
Customer Tastes and Preferences.......................................................................................................13
Social and Cultural Factors Impacting the Tesla Model 3...............................................................15
Analyzing the Consumer Market...............................................................................................17
Cultural Factors Influencing Consumer Purchasing........................................................................17
Social Factors Influencing Consumer Purchasing............................................................................18
Social Influences – Socioeconomic Factors......................................................................................19
Social Influences – Green Living......................................................................................................19
Personal Factors Affecting Consumer Behavior...............................................................................20
Psychological Factors Affecting Consumer Behavior:......................................................................21
Market Segments.........................................................................................................................22
Variables Tesla Uses to Segment its Target Markets.........................................................................22
How Tesla Evaluates the Attractiveness of Each Identified Segment..............................................23
Should Tesla Pursue Full Market Coverage, Market Specialization, Product Specialization,
Selective Specialization, or Single-Segment Concentration..............................................................23
Tesla’s Target Markets........................................................................................................................24
Specific Needs Tesla Model 3 Addresses for Each Target Market...................................................24
Target................................................................................................................................................24
Segment............................................................................................................................................25
Positioning....................................................................................................................................25
Positioning Statement for Tesla Model 3...........................................................................................25
How Tesla Model 3 is Positioned in the Marketplace.......................................................................26
Competition..................................................................................................................................27
Market Leader Strengths and Weaknesses........................................................................................27
Leader Strengths...............................................................................................................................28
Leader Weaknesses...........................................................................................................................29
Product Branding........................................................................................................................30
Differentiating Tesla Model 3’s Brand from the Competition..........................................................30
Brand Promise for the Tesla Model 3.................................................................................................31
Comparable Brand Promises.............................................................................................................32
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Packaging and Labeling......................................................................................................................33
Packaging..........................................................................................................................................33
Labeling............................................................................................................................................35
Services.........................................................................................................................................35
Support Services Buyers of Tesla Model 3 Want and Need..............................................................35
Support Services Offered by Competitors.........................................................................................37
How Competitors’ Support Service Affect Tesla...............................................................................38
Post-Sale Service Arrangements Offered by Tesla............................................................................39
How Repair/Service Efforts Affect Customer Satisfaction...............................................................41
Pricing...........................................................................................................................................42
Price Adaptations Tesla Should Include in its Marketing Plan........................................................42
Changes Group 4 Would Make in the Pricing of the Tesla Model 3................................................43
Promotions....................................................................................................................................44
Integrated Marketing Communication (IMC) Mix Components used by Tesla.............................44
Tesla’s IMC.......................................................................................................................................44
How Tesla Should Use IMC..............................................................................................................45
Internet Marketing for Tesla Model 3................................................................................................46
Social Media Marketing for Tesla Model 3........................................................................................46
Value for Tesla Model 3 to Customers...............................................................................................48
Socially Responsible Marketing (SRM).....................................................................................49
Socially Responsible Marketing.........................................................................................................49
How Tesla Can Become More Socially Responsible..........................................................................50
Conclusion....................................................................................................................................50
References.....................................................................................................................................51
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Introduction
Old 4 Ps: Product, Place, Promotion, Price
After being announced in 2015, the Tesla Model 3 sedan is set to launch production in
2017. In the beginning stages of developing, designing, and launching the product, Tesla had to
effectively address the four P’s associated with the Model 3 vehicle. E. Jerome McCarthy first
introduced the first four P’s of marketing in 1960: product, price, place, and promotion
(Yudelson, 1999). The Tesla Model 3 product specifically addresses each element of the
marketing mix in order to appropriately identify its target market.
Product
Tesla is the brand name, while the product is the Model 3. The Tesla Model 3 is designed
based off Tesla’s current market classification, use of technology, and the newest aspect Tesla
will offer with the Model 3 is: affordability. The Model 3 is designed to accomplish high safety
ratings, seat five adults, go from 0 to 60 in 6 seconds, drive 215 miles per charge, autopilot
hardware, power electronics, and technologies like: mobile computing, sensing, displays, and
connectivity (Tesla Motors, Inc, 2015). Some of the features listed are new specifically for the
Model 3, but one important feature that is congruent throughout all the Tesla models is the fact
they run off electricity, opposed to gasoline or diesel fuel.
The product variety and different packages have yet to be released, however the Tesla
models that are currently manufactured incorporate different package options. One is the
performance option, with higher top speed, “Ludicrous” acceleration (0 to 60 in 2.8 seconds),
and overall more motor power. The other packages vary in mileage, top speeds, torque,
acceleration, and motor power1.
1 https://www.tesla.com/model3
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Tesla globally operates 118 service locations as of December 31, 2015 (Tesla Motors, Inc,
2015). Car service can be accomplished at the company-owned centers, or Service Plus
locations. They also offer Tesla Ranger mobile technicians for problems that do not require a
vehicle lift. Since the vehicles are equipped to wirelessly upload data, the Rangers can detect and
solve issues without having to bring the car into a shop. The Rangers can also provide personal
service at-home or in remote locations. Tesla provides a four year 50,000-mile warranty along
with an eight year, infinite mile, warranty for the battery and drive unit. There are several other
warranty plans available beyond the standard two.
Price
The Model 3 is expected to be listed for $35,000 for the basic, no-frills, model; the first
time Tesla has created a product that can potentially reach the general masses in regards to price
range. As previously mentioned, the Model 3 is equipped with many new features and energy
conscious engineering, which is appealing especially with the lower price. Tesla has designed the
Model 3 with the idea that if the benefits are perceived to be greater than the costs, chances of
product adoption is substantially higher.
To purchase a Model 3, one must make a reservation on their website with $1,000 initial
payment. At this stage, the customer selects their vehicle specifications and sign a purchase
agreement. The rest of the purchase payment is due upon vehicle delivery to the customer. Tesla
offers loans and leases for vehicles in North America, Europe, and Asia through specific
financial institutions (Tesla Motors, Inc, 2015).
Place
All Tesla’s sales and service operations are owned directly by the company, allowing
them to improve customer interaction, control the product development, and the overall
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efficiency and effectiveness of production. Tesla has several facilities where they manufacture
their products, “in Fremont, California, Lathrop, California, Tilburg, Netherlands and at our
Gigafactory near Reno, Nevada” (Tesla Motors, Inc, 2015). Between their production facilities,
service and sales centers, and off-site assistance, Tesla is continuing to grow and build new
locations, in order to broaden their market and expand their footprint globally. In regards to
inventory, Tesla maintains low levels of “shelf” products by allowing the customer to customize
their vehicle through their website. By keeping inventory low, it cuts costs for raw materials,
work-in-process, and a low amount of finished products sitting un-purchased. This inventory
method allows Tesla to eliminate writing-off unused or outdated products.
Promotion
Tesla generates a significant amount of their advertisements through media outlets. As
stated in their 10-k report, “to date, media coverage and word of mouth have been the primary
drivers of our sales leads and have helped us achieve sales without traditional advertising and at
relatively low marketing costs” (Tesla Motors, Inc, 2015). Because the company has low
inventory levels and do not have wide-spread dealership locations, their advertising is key to
turning profits. The idea that Tesla has created electric cars during a period where fuel is starting
to become a thing of the past, along with incorporating futuristic features and technology, sets
the ground for large word-of-mouth marketing; it’s difficult for people to not talk about the new
model. Sales staff often play a major role in promotion of a product, but in the case of Tesla cars,
and especially with the affordability of the Model 3, their first-mover product design has created
enough word-of-mouth advertising to market and manufacture the car successfully.
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New 4 Ps: People Processes Programs Performance
The original four P’s are no longer sufficient in determining the target market on their own,
and require an additional, “new,” four P’s to encompass modern marketing. As industrialized
areas of the world begin shifting from product orientation to service-based industries, marketing
structure shifts as well. The new four P’s of marketing are: people, processes, performance, and
programs.
People
The people within the organization play a substantial role in the marketing ecosystem;
another factor that weighs heavily on the ecosystem is the people outside the organization that
influence their decisions, buy their products, or participate within their supply chain. For Tesla,
the people within their organization deserve the credit for designing, manufacturing, testing, and
launching a product that produced 276,000 orders within 48 hours2 of the March 31, 2016 reveal.
Each employee played a part in making Tesla, in particularly the Model 3, a reality and such a
success right from the start. Tesla was capable of aligning their employee goals throughout their
marketing ecosystem in order to build strategic marketing management.
Processes
As previously mentioned, aligning people is key to marketing success, but another
important aspect is documenting the processes that support alignment and adopting new changes
in order to meet the needs of an ever-growing consumer demand. Tesla has clearly demonstrated
successful marketing processes, by implementing creativity, control, and structure from the
marketing managers down through the chain of command. Each one of their models has tested
2 http://www.post-gazette.com/business/money/2016/06/24/Consumer-Reports-Everything-you-
need-to-know-about-the-Tesla-Model-3/stories/201606230206
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and improved their marketing technique; so successfully that the are able to generate more than
$276 million3 in revenue solely down payments on a car that hasn’t even begun manufacturing.
Performance
Tesla’s goal is to maintain marketing performance and evaluate it constantly in order to
predict customer preferences and adapt to changing marketing scenarios and planning. In regards
to achieving their fullest performance potential, Tesla has significant areas in which to improve.
For instance, by only using media advertisement and word-of-mouth, there are a plethora of
marketing strategies left untouched by the firm. However, their technological performance and
business strategy have compensated for their apparent lack of marketing performance. Once their
existing vehicles approach market saturation, its critical for Tesla to initiate calculated and
strategic marketing performance to continue innovation and producing revenue
Programs
The marketing program ultimately evaluates the product (the design, quality, branding, and
services) in relation to the customer. In evaluating the product, the overall program of marketing
is to create a product that meets all consumer criteria; the marketing program ideally involves the
ability to “create, communicate, and deliver” (Kotler & Keller, 2016) a product in which the
customer expects. By evaluating the initial success of Tesla’s Model 3 product launch, the high
demand for a car that has yet to begin mass manufactured and a minimal amount of knowledge
available, Tesla has effectively and efficiently used their marketing programs to attract
customers, however until the Model 3 is in the hand of consumers and on the streets, it us
unknown whether the company has successfully implemented marketing programs.
3 276,000 orders x $1,000 initial payment.
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Scanning the Market Environment
Demographic Trends of Tesla Model 3
If you have read or seen the news lately you are aware of the new Tesla 3 model.
Everyone has been raving about the new car that can drive itself. All it needs is someone to get
behind the driving wheel and start the process. And not only does it have state of the art features,
it also have eco friendly perks. It’s innovative and it is good for the environment. So what type
of customers does this new car attract? The results may be a bit surprising according to a recent
article by Kristen Korosec in Fortune magazine. “A market for used Tesla model S sedans has
pushed the all-electric automaker into a new demographic” (2015). Now that there are a few
different models of Tesla, it has changed the demographics of who is purchasing these cars.
When the first model came out on the market the buyers were those making more than 100,000
dollars a year. Now however, things are changing. With these used cars being more affordable
and the market opening, new customers have become brand loyal to the Tesla model and more
interested in the Tesla 3. Korosec continues in here article to explain that, “The findings, which
show the company has a wide-ranging buyer base, bode well for Tesla as it prepares to make its
biggest move into the mass market with the upcoming Model 3, Caldwell says” (2015). From a
marketing standpoint this is genius for Tesla. By introducing their used model online they have
open up their market allowing more customers from the millennial generation. However, this is
only one side of the argument revolving around the Tesla 3 model demographic. The new Tesla 3
is the cheapest Tesla model starting out at $35,000. Ian Bogost states in his article that, “Tesla
calls the Model 3, which the company revealed last week, “our most affordable car yet.” At a
starting price of $35,000, they’re not wrong, but affordability is relative” (2016). Bogost argues
that even though the new Tesla is affordable the company only appeals to those who are already
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making 100k a year. “Despite the decidedly average sticker price, would-be Model 3 buyers are
not necessarily average themselves” (Bogost, 2016). As the Tesla 3 model continues to emerge,
the demographic is still to be determined. One thing that we do know with the Tesla 3 is that it
appeals to the millennial generation who is making a lot of money and is seeking to appeal to the
average customer although Tesla itself is far from average. These two differing opinions should
be no surprise since Tesla is a relatively young company. “In spite of the global strides made by
Tesla in terms of technological developments, global branding and market adoption, it remains a
relatively young company within a nascent industry – compared to the 150-year-old internal
combustion vehicle industry” (Mangram, 2012). As Tesla continues to grow and adapt its
marketing strategies there is no way to fully predict their target market. However, we can see that
they are seeking to broaden this market. “Tesla’s overall strategy is to first establish a foundation
for electric vehicle sales via its high-end Roadster model – an objective it has already
accomplished” (Mangram, 2012). Next Tesla wanted to introduce the model S Sedan that is a
little cheaper and then the Model 3 that is even cheaper. Tesla has proven its worth to the target
market, thus creating a name for itself among customers. Tesla has accomplished these three
things and they continue to increase the customer market. So although the market demographic is
not the clearest, we will continue to see the demographic present itself as the new model “hit’s
the shelves.”
Influence of Economic Trends on Tesla Model 3
Tesla has tall shoes to fill being subsequent to the Tesla Model S, which was rated by
Consumer Reports as the best car ever tested. Tesla understands that in order to flourish in a
highly competitive industry, the cost of ownership needs to come down. Tesla goal is to build a
car cost effectively that provides the consumer with the ability to drive 200 miles on a full
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battery; make charging the battery as easy as pumping gas; and come in price of under $35,000
with a $7,500 Federally mandated incentive for buying an electric car. While the Tesla Model 3
won’t actually hit the market until March 2017, it hasn’t stopped the pre-orders from rolling in
with 325,000 pre-orders to date. The thought is that the electric car won’t replace the
conventional car any time soon but Tesla’s developments in the electric car would allow for a
more affordable prices. Tesla also follows what is called a direct consumer distribution model
bypassing franchised dealers thus giving significant cost savings for the consumer.
The BMW 3 Series is currently the closet direct competitor for the Tesla model 3. Having
stood the test of time for over a decade the BMW series 3 is very popular with consumers and
runs on average $32,950. BMW is well ahead of Tesla in advanced vehicle technology like self-
parking and cruise control that can automatically follow highway lanes and maintain distance
from other vehicles. Tesla knows that in order to achieve the goal of being comparable to the
BMW 3 series it needs to embark on producing their own batteries that are efficient and lower
cost so that it would make owning your dream car feasible. Rather than waiting for the battery
technology to evolve, BMW is selling an optional “range extender” with a two-cylinder
motorcycle engine that maintains a battery at a 5 percent power level thus extending the range an
additional 80 miles.
Technological Changes and Consumer of Acceptance
Tesla Motors was founded in 2003 by engineers in Silicon Valley, CA who had a single
objective in mind: to prove that electric cars could be better than gasoline-powered cars (Tesla
Motors, 2016). Since its inception, Tesla has released the Roadster, Model S, and the Model X, a
sports car, sedan, and crossover, respectively, and has plans to place the Model 3, its second
sedan, into production in late 2017. The Tesla Roadster, a Lotus inspired sports car launched in
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2008 at around $110K each, provided a volatile start for the new company. Initiating the design
of its first model by using the shell of the Lotus sports car as a baseline resulted in expensive
challenges for Tesla Motors as it went through many iterations of corrective action “to make the
car production roadworthy and to remove all the bugs it had after deliveries started” (Tech
Insider, 2016).
Despite challenges in design and production, Tesla Motors achieved high performance
with its first model; the Roadster was capable of accelerating from 0-60 mph in 3.7 seconds, a
rate greater than many high performing combustion engine sports cars, while achieving a range
of 245 miles per charge of its lithium ion battery (Tesla Motors, 2016). However, despite these
successes, “the Roadster felt like a novelty” and served “largely as a massive learning
experience” for Tesla (Tech Insider, 2016). Its high price and sense of novelty resulted in only
around 2,400 Roadsters sold.
Motivated by the learning opportunities afforded by the Roadster, Tesla aimed to design a
high performing, luxury electric sedan that was more affordable. This goal resulted in the Model
S, a relatively spacious four-door sedan capable of achieving 0-60 mph in approximately five
seconds at around $70K each, in 2012. The Tesla Model S was well received by the public which
resulted in 100K Model S sales just 3 ½ years after its initial release. Despite having a
significantly higher unit price compared to its competition, the Model S reached “100,000 sales
close to 1.5 years quicker than did the Chevy Volt, and just five months longer than it took
Nissan’s Leaf” (Hybrid Cars, 2015).
While offering a dominant presence within the niche electric car industry, with an MSRP
of $70K and $80K for the Model S and Model X, respectively, Tesla has yet to offer significant
competition to its gasoline-powered industry counterparts. This may change with the pending
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release of the Model 3 which has an anticipated MSRP of around $35K making it the most
affordable of all Tesla models yet. Tesla asserts that its new model is capable of achieving 0-60
mph in under six seconds, can seat 5 adults, and has a 215 mile range per full battery charge and
further asserts that “it’s going to be awesome” (Tesla Motors, 2016).
If it turns out to be as awesome as Tesla is claiming and the performance and luxury of
the Model 3 is consistent and comparable to its predecessors, it could result in Tesla leading a
revolution within the automotive industry. Upon unveiling its affordable Model 3 in late March,
2016, Tesla “garnered more than 276,000 pre-orders in three days” (IBT, 2016). Each pre-order
required a refundable deposit of $1K which provided Tesla with over $250M in less than three
days. At MSRP, the final sales of all Model 3s reserved within 3 days after its announcement will
provide the company with around $11B. This worldwide enthusiasm for the Model 3 indicates
that Tesla’s goal of making electric cars better than gas-powered cars is something that the public
is ready to see take place; a mentality that may even transcend social and cultural factors.
Customer Tastes and Preferences
The Tesla Model 3 is already causing excitement in the automotive industry, and it has
not even begun production. According to the CEO of Tesla, Elon Musk, “the official pre-order
total was 373,000” (Branman, M. and Hard, A., 2016). With all this hype Tesla is estimating the
revenue of their pre-orders to be way over $10 billion. The normal consumers for Tesla are said
to be “business executives and entrepreneurs who are city dwellers, tech-savvy and green-
friendly…wealthy, early adopters in the upper to middle class.” (Zucchi, K., 2015). Model 3 is
Tesla’s attempt to meet more of a broad range of consumers and their tastes and preferences.
Model 3 will bring a completely new set of consumers to Tesla. In order for Tesla to meet
this group’s tastes and preferences they will have to bump up their production, retail, and service
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capacity. Even though demand for electric vehicles is just not beginning Tesla has been working
on them for over a decade. Model 3 is said to be “a lower priced sedan designed for the mass
market” (Annual Report). The consumer’s top tastes and preferences in this market are long
range, charging flexibility, high - performance, energy efficiency, and cost.
Tesla Model 3, is claimed to be able to provide their consumers with a long range. The
CEO claims that the Model 3 will “have a base range of 215 miles with larger battery versions
likely hitting 250 miles” (Branman, M., et al, 2016). This could get a normal city commuter a
good 2 days or so on one full-charge. For a long distance trip Model 3 could get you up to about
4 hours of travel.
The charging flexibility will be great for the newest Tesla Model 3. It is said that once
this model hits the market there will be more places for consumers to charge in between home
charges. “Musk was quick to point out that charging stations are only needed where people
congregate, like at offices and travel checkpoints, because 90 percent of current Tesla vehicle
charging takes place at home” (Branman, M., et al, 2016). Consumers will just have to plan their
trip stops around the Supercharge stations. Model 3 will have charging flexibility because it will
have more places to charge.
Model 3 will meet the performance preferences of most consumers in the electric vehicle
market. It is said that the “ludicrous mode” (Branman, M., et al, 2016) will be an available
upgrade for this model. The autopilot mode that is available in previous models will also be
available. Tesla claims that their “vehicles deliver unparalleled driving experiences with
instantaneous and sustained acceleration through an extended range of speed” (Annual Report).
The consumer’s preference for energy efficiency has become more and more important.
There has been a movement to be more “green” and to being more energy efficient will help with
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this. Tesla believes that by them only using “an electric powertrain enables us to create more
energy efficient vehicles” (Annual Report). With this being a new preference Tesla is trying to
play on “the Eco-friendly demand” that is growing because of the “desire to reduce carbon
emissions” (Zucchi, K., 2015).
The consumer’s preference on cost has and will always be more bang for the buck. Tesla
believes that they can provide consumers with a more affordable option in the electric vehicle
market with Model 3. With the desire for more affordability, Tesla is saying that “the Model 3
would cost $35,000 before tax incentives,” (Branman, M., et al, 2016) and go up from there with
upgrades.
In conclusion, the Tesla Model 3 is not just a car, but could end up being a game changer. The
consumers of this automobile are looking for long range, charging flexibility, high -
performance, energy efficiency, and cost. Tesla hopes to begin fulfilling their preorders for
Model 3 “will be ready next year (2017)” (Branman, M., et al, 2016). Tesla hopes to meet their
consumer’s taste and preferences, with the new Model 3.
Social and Cultural Factors Impacting the Tesla Model 3
As provided by Tesla Motors on its website, the company “is not just an automaker, but
also a technology and design company with a focus on energy innovation” (2016). This
conscious display of corporate responsibility has provided Tesla with a loyal consumer base
across the world. Currently, Tesla is “growing faster outside the United States than in it” (CNBC,
2015). To ensure continued growth outside of the U.S., Tesla Chief Executive Officer, Elon
Musk, outlines the company’s plan:
“We're fixing fundamental weaknesses by ensuring that we've got a good supercharger
infrastructure, a good service center infrastructure, that any perceptions about the
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company are addressed. And in a lot of places, it takes time to build consumer
confidence. They need to hear about Tesla a lot before they are comfortable making a
significant asset purchase" (CNBC, 2015).
Efraim Levy of S&P Capital IQ describes the ability for Tesla’s production to meet its
demand as the company’s biggest obstacle for both domestic and international sales in stating,
“the question is what they can make rather than what they can sell” (CNBC, 2015). If Tesla can
keep up with the explosive demand for the Model 3 then exponential growth of the company is
probable across the world.
Such growth will benefit Tesla, its shareholders, as well as the residents of many cities
worldwide plagued with pollution. According to a list published by SCGH, two cities in China,
Linfen and Tianying, are among the top most polluted cities in the world, primarily due to
automotive emissions (SCGH, 2009). The Wallstreet Journal reports that “China will soon have
nearly as many drivers as the U.S. has people” (2014) with nearly 300M drivers behind the
wheel throughout the country. The buying power in China is enormous for Tesla as “the world's
most populous country now has more millionaires than the top eight European nations
combined” (CNBC, 2015) with around 3.6M millionaires in the country. China’s buying power
along with the chronic air pollution challenges it faces make it a prime target for Tesla’s
international market.
Tesla Motors has established itself as more than an automobile manufacturer. With the
inevitabilities of global warming and the ominous implications of a lack of action ever present in
conversations taking place within the political, philosophical, and scientific communities, many
individuals and companies are considering what their contribution should look like to ensure that
human innovation and comfort doesn’t come at the expense of the planet upon which we live.
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Tesla Motors is trying to do its part by not only manufacturing zero emission and high
performing electric cars but also entering the energy conservation business through Tesla
engineered energy storage packs for home powering, primarily powered through solar panels.
Embedding the promotion of green living into its mission has resulted in Tesla gaining a fiercely
loyal following. The revenue and interest raised by the high performing and affordable Tesla
Model 3 is proof that green living is a concept valued worldwide among all social classes and
cultures.
Analyzing the Consumer Market
Cultural Factors Influencing Consumer Purchasing
Since its inception in 2003, Tesla has released the Roadster, Model S, and the Model X, a
sports car, sedan, and crossover, respectively, and has plans to place the Model 3, its second
sedan, into production in late 2017. Since “the Roadster was first put into production in 2008,
Tesla Motors has sold nearly 125,000 cars” (IBT, 2016). This massive growth in the span of only
eight years is primarily due to the popularity of the Model S, a spacious four-door sedan released
in 2012 capable of achieving 0-60 mph in approximately five seconds at around $70K per unit.
The Tesla Model S was so well received by the public that 100K models were sold just 3 ½ years
after its initial release. Despite having a significantly higher unit price compared to its
competition, the Model S reached “100,000 sales close to 1.5 years quicker than did the Chevy
Volt, and just five months longer than it took Nissan’s Leaf” (Hybrid Cars, 2015).
The cause of this exponential growth is two-fold: 1) Tesla outperforms its counterparts
within the electric vehicle category in both its vehicle’s amenities as well as performance and 2)
the widespread challenge of global warming made worse by gasoline powered vehicle emissions
is a universally shared crisis that transcends social class and culture.
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Continued growth will benefit Tesla, its shareholders, as well as the residents of many
cities worldwide plagued with pollution. According to a list published by SCGH, two cities in
China: Linfen and Tianying, are among the top most polluted cities in the world, primarily due to
automotive emissions (SCGH, 2009). Not only do gasoline powered vehicles have a negative
impact on the air quality in China, they are also costly to operate. In Hong Kong, the average
price for a gallon of gas as of July, 2016 is $7.12 per gallon (Bloomberg, 2016), or on average
about $5 per gallon more costly than in the U.S.
China is not alone in grappling with the disproportion of cost to operate its primary
modes of transportation relative to the country’s earning potential. After the Chinese cities of
Linfen and Tianying, SCGH identifies the Indian cities of Sukinda and Vapi as the next most
polluted cities in the world (2009). Within India, drivers “must put in more than half a day’s
work, on average, to afford a single gallon of gasoline” (Bloomberg, 2016). In these countries
where earnings are significantly lower than most of the world, the investment into an electric car
such as the upcoming Model 3 has the potential to better the air quality for future generations
while easing the expense of day to day living.
Social Factors Influencing Consumer Purchasing
Tesla perceives itself differently than most automobile manufacturing companies in
describing itself as “not just an automaker, but also a technology and design company with a
focus on energy innovation” (Tesla Motors, 2016). Tesla Motors is trying to do its part by not
only manufacturing zero emission and high performing electric cars but also entering the energy
conservation business through Tesla engineered energy storage packs for home powering,
primarily powered through solar panels.
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Social Influences – Socioeconomic Factors
Tesla’s displayed sense of corporate responsibility has provided the business with a loyal
yet primarily affluent consumer base across the world. To expand its consumer base and
maximize the effects of its products on the world, Tesla has announced plans to release the
Model 3, a spacious sedan capable of achieving 0-60 mph in under six seconds and will be able
to cover up to 215 miles per full battery charge. The Model 3 is anticipated to MSRP at around
$35K which is only about half of the cost of Tesla’s currently most affordable model, the Model
S. Releasing additional plans to expand its consumer base and further promote green living, on
21 July 16, Elon Musk confirmed Tesla’s plan to expand its line of electric cars “to cover all
types of ground vehicles, specifically buses and trucks” (BBC, 2016). To ease the expense of
purchasing these relatively expensive vehicles for businesses and individuals, Tesla intends to
engineer fully autonomous vehicles that “would allow owners to add their cars to a shared fleet,
meaning the vehicles can be making money for their owners when they are not using them”
(BBC, 2016).
Social Influences – Green Living
Green living is a philosophy and lifestyle focused on the minimization of the human
carbon footprint. This philosophy is valued among all social classes and cultures due to its
positive impact on the planet. Embedding the green living philosophy and lifestyle into its
mission has provided Tesla with a fiercely loyal following. This loyalty has proven contagious as
non-Tesla owning consumers, as well as media outlets, are consistently eager to hear of Tesla’s
next big idea, development, release, and plans for the future. This public interest in the activity of
Tesla has generated a social influence on individual buying decisions as proven by the
enthusiastic reception of the plans to release the Model 3. Primarily motivated by the social
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influence associated with living green, consumers are displaying an enthusiastic will to be a part
of the movement that Tesla has initiated.
Personal Factors Affecting Consumer Behavior
Personal factors affecting consumer behavior include occupation, age, economic
condition, and personality. A consumer’s occupation plays a direct role on their purchasing
behavior; occupation controls salary levels, influences from coworkers, and overall cultural norm
from within the office-place. A consumer’s age influences their purchasing decisions, which can
be further broken down into four groups: bachelorhood, newly married, family with children, and
empty nest. The stage most likely to buy the Model 3 would be bachelorhood (individuals who
spend lavishly) and upper-middle class family with children, since they would be looking for an
average-priced sedan with technology and environmental benefits. Similar to occupation,
economic condition involves the consumer’s income and how much money they spend on
products or services. Tesla vehicles draw high income and upper-middle class individuals that
buy expensive, premium products rather than necessary items. Personality is a mixture of an
individual’s openness to new experiences, how diligent, how outgoing, how agreeable, and how
neurotic one is. Although personality traits are less direct than the other factors, they still play a
part in influencing a consumer’s purchasing decision.
The Tesla Model 3 most important personal factors affecting consumer behavior is
occupation, economic status, and age, respectfully. There have been studies that an individual
spends more time in office and with coworkers over a lifetime than they do with their own
family. Therefore, it’s easy to be influenced by coworker’s purchasing behaviors. The office is
also an outlet to talk about new products, purchases, and post-purchase behaviors; if a friend
from work ordered the Model 3, most likely they would have talked about the purchase and may
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have influenced others in the office to consider it as well. Economic status determines whether
an individual is capable of buying the Model 3. Before the product launch, Tesla only
manufactured electric cars that were above the salary level of an average family income; with the
Model 3, it’s the first time a middle class family could afford the Tesla brand and opened new
doors for a lower salary level than before. Lastly, age plays a role in the purchasing process of
the Model 3 because typically younger, more innovative customers gravitate towards this model.
Since the price is considerably lower than other Tesla models, younger generations will be able
to afford this car while meeting their expectation of technologically advanced features and
environmentally conscious electric energy.
Psychological Factors Affecting Consumer Behavior:
Psychological factors include the motives, attitudes, perceptions, learning, and lifestyle of
the consumer. Motives are the need that’s sufficiently pressing, in order to direct the person to
seek satisfaction. Attitude is a consumer’s evaluation of their feelings about and behavioral
tendencies toward an object or idea; there are three components of attitude: cognitive, affective,
and behavioral. Perception is the selection, organization and interpretation of sensory
information to for a meaning. There are also three perceptual processes: selective attention,
selective distortion, and selective retention. Learning is the change in an individual’s behavior
due to their experience, and lastly, lifestyle is the way consumers spend their time and money on
a daily basis.
The psychological factors that influence consumers the most when purchasing a Tesla
Model 3 are motives and attitudes. The motives behind buying the Model 3 would be the need to
drive a car designated as a first-mover in technology. The “need” to order a Model 3 is more
along the lines of desire to own the newest invention in car technology and eco-friendliness.
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Similar to motives, an individual’s attitude influences the need to order a Model 3 over other cars
currently on the market. The consumer feels superior, innovative, and stylish after placing an
order for the Model 3.
Market Segments
Variables Tesla Uses to Segment its Target Markets
Segmenting a target market is extremely important when beginning your marketing.
“This process – knowing to whom and when to market your product or service – can result in
much higher rates of return, and it involves implementing systems, rather than relying on
indiscriminate marketing” (Cohn, 2015). Tesla segments its target market in the following ways,
socio-economic status, age, and geographic location. Socio-economic status is used to segment
Tesla consumers by narrowing the social status of potential customers. Those interested in
purchasing an electric car are people who care about the environment, have enough money to
pay extra so that they can take care of the environment, and people who want to have the latest
technology. When it comes to the age of Tesla’s target market, this is changing. Previously the
age range was much higher since the Tesla models were more expensive. Only those who were
older and had the income were able to purchase its products. Now, with the introduction of the
Tesla 3 model the price range has decreased opening its market to the millennial generation. The
third segment that the Tesla market involves is geographic location. The location is important
because Tesla knows its not going to be selling to people in areas that are not environmentally
friendly, or locations that have not adapted to electric power stations. Tesla also has to take into
consideration location because “Tesla’s distribution strategy is much different from that of other
automobile manufacturers including Ford (F), Fiat Chrysler (FCAU), and General Motors (GM).
Unlike legacy automakers, Tesla does not have a dealer network”(O’Hara, 2015).
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How Tesla Evaluates the Attractiveness of Each Identified Segment.
Attractiveness of the identified segments are evaluated in a few different ways. First the
location of previous sales is monitored. By knowing the location of sales, Tesla can know where
the customers are mostly centered, and if charging locations are located in those areas. The next
way the evaluate it is by the pre-ordered sales. These sales show the location of the customer and
allow Tesla to segment its market. However, Tesla does face challenges when selling its product.
“Some states, including Texas and Michigan, do not allow automobile manufacturers to act as
dealers. This can be seen in the previous chart. Mojomotors presents this information based on
data from Tesla Motors and Georgia State University” (O’Hara, 2015). O’Hara goes on to
explain however, that does not mean that people in these states cannot purchase the cars, but it
does affect marketing in these areas. Lastly Tesla uses internet browsing to evaluate the types of
consumers that they are targeting as well as the location that these customers are coming from.
By evaluating this information Tesla is able to focus its segmented market even further without
leaving any potential customer out.
Should Tesla Pursue Full Market Coverage, Market Specialization, Product Specialization,
Selective Specialization, or Single-Segment Concentration.
To promote the Tesla 3, it would be best to utilize a single segment concentration. This
strategy, is one that Tesla uses to market to only one segment of the population. Tesla 3 was
designed with a specific target market in mind, the Y generation. This segment is focused on
middle class adults in their mid-20’s to early 40’s. The Tesla 3 offers the consumer with an Eco-
Friendly, tech savvy and entry level luxury vehicle which makes it a picture-perfect product for a
single-segment concentration. This segment of consumers use social media and peer feedback to
influence their buying decisions, and this is why Tesla is focusing their marketing strategy on
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social media outlets, such as Facebook, Twitter, blogs, and other media platforms. Marketing for
the Tesla 3 should be mostly web-based to reach the designated target market.
Tesla’s Target Markets
Tesla’s target market has evolved over the years. The first vehicle manufactured by Tesla
was the Roadster. With a price tag of over $100,000 the target market was left to upper class
business executives. As Tesla moved on to their Model S, coming in around $70,000, their
market shifted a little to include entrepreneurs, as well as tech savvy individuals who primary
goal was to go green. Through these years Tesla has been established as one of the leaders in the
Electronic Vehicle Market with the understanding that they need to grow and reach more
consumers.
When Tesla began developing the Model 3 their goal was to grow their potential target
market beyond the baby boomers by offering an entry level luxury sedan that is fully electric at a
reasonable price. By doing such they hoped to create brand loyalty and options for purchase.
The difference that the Tesla Model 3 can provide that isn’t offered by its competitors is that it is
fully electric with the capability of driving over 215 miles on one fully charged battery. With
that being said and the new target market being the Y generation, Tesla had to incorporate the
Tesla’s sleek design with an efficient path to a sustainable energy future without being perceived
as ugly by their new target market.
Specific Needs Tesla Model 3 Addresses for Each Target Market
Target
Tesla’s new target market with the Model 3 has evolved to the Y generation, mid 20’s to
early 40’s, middle class working adults. With the spending power of over $187 billion (Keller,
Kotler 2012) it isn’t surprising that Tesla sought to branch out to reach this market. The
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generation Y has decades left to spend money, which is what Tesla is hoping for with the brand
loyalty they hope to create with this generation. With the average generation Y in the early stages
of their career, Tesla can provide an entry level luxury vehicle for the entry level young
professional.
Segment
Tesla has segment their new target market into three categories; Eco-Friendly, Tech
Savvy and entry level luxury. For the eco-friendly they incorporated their sleek luxury design
that Tesla is known for, while being fully electric with zero emissions and double the range. Tesla
targeted the tech savvy with the growing technology of a fully electric car. The basic options of
the Tesla Model 3 should be enough to attract the tech savvy with autopilot hardware and
supercharging capabilities but if not, there are upgrades that are sure to please. Tesla’s target on
the entry level luxury focuses on young professionals looking for a luxury sedan but at the early
stages of their career so they need a reasonable price with front and rear trunk space and
comfortable seating for 5. Tesla believes that an entry level price will lead to more customers,
thus leading to more sales ultimately leading to brand loyalty.
Positioning
Positioning Statement for Tesla Model 3
An appropriate positioning statement for the Tesla 3 model is “Making an electric car
affordable for everyone.” Over the years Tesla has developed themselves as leaders in innovation
and has used their design to change the minds of many young buyers. They don’t believe that
owning an electric car should be something only few can afford.
When Tesla first got started they had a goal in mind of providing an efficient path to a
sustainable energy future. Tesla knew that a start-up company wouldn’t be taken very seriously
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when it came to developing an electric car and they knew development wouldn’t be cheap.
Through the years they have developed a few electric cars, each building off the other, each
targeting a new market.
How Tesla Model 3 is Positioned in the Marketplace
Tesla has a good positioning with their “foot in the present” and a “foot in the future”
(Keller, Kotler 2012). They have identified their competitors, that ranges from the BMW to the
Chevy Bolt and have developed a plan to take their newest model the Tesla 3, one step further by
developing the battery that runs this all electric car. Tesla understands that a product needs room
to grow but strike the right balance between what the Tesla brand is and what it could be. This is
their third electric product and their third target market. Tesla has used the development and
success of their previous two models, the Roadster and Tesla S to bring a practical, entry price
product, in hopes of reaching a broader customer base. Tesla’s goal is to use its design and
technology to change the minds of many young buyers. Tesla has positioned the Model 3 to hit
three key areas, eco-friendly, entry level luxury and tech savvy.
The Tesla 3 is a middle size, sleek luxury vehicle with the design Tesla is known for but
is still in the developing stage and has not yet hit the road. Their target market for the Tesla
Model 3 isthe Y generation, mid 20’s to early 40’s, middle class working adults. Tesla positioned
their Tesla Model 3 to attract the Generation Y buyers because they still have decades left to
spend money, which is what Tesla is hoping for with the brand loyalty they hope to create with
this generation.
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Competition
Market Leader Strengths and Weaknesses
The electric car industry was incepted more than 100 years ago, starting as a “series of
breakthroughs -- from the battery to the electric motor -- in the 1800s that led to the first electric
vehicle on the road” (DOE, 2014). Scientists and innovators throughout the world toiled at
producing a functional prototype; in the U.S. “the first successful electric car made its debut
around 1890 thanks to William Morrison, a chemist who lived in Des Moines, Iowa” (DOE,
2014). Mr. Morrison’s prototype electric wagon was capable of traveling at speeds up to 14 mph
and paved the way forward for today’s electric car industry competitors.
Despite steady advancements within the electric car industry, it remained stagnant for
about a century due to rampant improvements in the production process for internal combustion
engines. The first turning point for the obscure industry may have been “the introduction of the
Toyota Prius in Japan in 1997” (DOE, 2014). The Prius was released in the U.S. in 2000 and
quickly became the “best-selling hybrid worldwide during the past decade” (DOE, 2014) due to
growing climate change concerns. Toyota may have started as the industry leader as a result of its
popular hybrid gas/electric Prius but didn’t stay that way for long.
Tesla Motors was founded in 2003 by engineers in Silicon Valley, CA who had a single
objective in mind: “to prove that electric cars could be better than gasoline-powered cars” (Tesla
Motors, 2016). Including comfort, luxury, style, performance, and environmental responsibility
into its mission resulted in Tesla’s immediate distinction from its competition. Since its
inception, Tesla has “become the largest auto industry employer in California” (DOE, 2014) due
to a combination of its popularity and credibility.
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Acclaims received on Tesla’s initial models prompted competitors to expedite the design
and production of their own electric cars; “In late 2010, the Chevy Volt and the Nissan LEAF
were released in the U.S. market.” (DOE, 2014). While the LEAF and Volt’s MSRP of around
$35K provided success, the Nissan and Chevy models failed to generate the following or
enthusiasm from the public captured by Tesla. This low consumer backing revealed itself in
sales; the Tesla Model S, which MSRPs for around $70K reached “100,000 sales close to 1.5
years quicker than did the Chevy Volt, and just five months longer than it took Nissan’s Leaf”
(Hybrid Cars, 2015). Tesla has been capable of leading the way within the electric car industry
even with price points double that of its competition. This is the result of Tesla’s emphasis on
luxury and performance matching, if not greater than, its gasoline powered counterparts. With its
recent announcement for release of the Model 3, with a significantly lowered starting price of
around $35K, Tesla appears to be on a path toward potentially changing the entire automotive
industry, if not only dominating the electric car industry.
Leader Strengths
Tesla established itself as more than an automobile manufacturer; on its website, the
company asserts that it “is not just an automaker, but also a technology and design company with
a focus on energy innovation” (Tesla Motors, 2016). With the inevitabilities of global warming
and the ominous implications of a lack of action, Tesla Motors is trying to do its part by not only
manufacturing zero emission and high performing electric cars but also entering the energy
conservation business through Tesla engineered energy storage packs for home powering,
primarily powered through solar panels. Embedding the promotion of green living into its
mission has resulted in Tesla’s loyal following of consumers.
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Tesla has also displayed that it is sensitive to consumer demand; sensing that the majority
of potential Tesla purchasers desired a more affordable, yet high performing and environmentally
friendly vehicle led to Tesla’s announcement of the Model 3. The more affordable Model 3 is
planned to be capable of achieving 0-60 mph in under six seconds and will be able to cover up to
215 miles per full battery charge at a starting price of $35K. Releasing additional plans to expand
its consumer base and further promote green living, on 21 July 16, Tesla CEO, Elon Musk,
confirmed Tesla’s plan to expand its line of electric cars “to cover all types of ground vehicles,
specifically buses and trucks” (BBC, 2016). To ease the expense of purchasing these relatively
expensive vehicles for businesses and individuals, Tesla intends to engineer fully autonomous
vehicles that “would allow owners to add their cars to a shared fleet, meaning the vehicles can be
making money for their owners when they are not using them” (BBC, 2016).
Leader Weaknesses
Tesla is notorious for production challenges which result in delay and occasional
consumer frustration; each of Tesla’s models, starting with the Roadster in 2008, the Model S in
2012, the Model X in 2015, and the Model 3 with plans for production starting in late 2017, has
provided Tesla with challenges to meet high public demand. For each model, there has been a
consistent theme causing the delays: high demand from the public and high standards set by
Tesla. For the Tesla Model X SUV:
“Originally, the company blamed the delays on the need to focus on hitting delivery
targets for the Model S sedan. Later, CEO Elon Musk talked about making sure the
vehicle met expectations before releasing it. In short, he wanted things to be as perfect as
could be.” (Forbes, 2015).
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For the highly anticipated Model 3, which “garnered more than 276,000 pre-orders in
three days” (IBT, 2016), Efraim Levy of S&P Capital IQ describes the ability for Tesla’s
production to meet its demand as the company’s biggest obstacle for both domestic and
international sales in stating, “the question is what they can make rather than what they can sell”
(CNBC, 2015). Despite production challenges, Tesla has stayed true to its mission of displaying
corporate responsibility through the manufacturing of not only efficient, high-performing electric
cars but energy storing battery packs for home use, as well. This commitment has resulted in
high credibility with the public, success in the automotive industry, and a loyal following of
environmentally conscious consumers.
Product Branding
Differentiating Tesla Model 3’s Brand from the Competition
In this day and age the business market is huge and almost all companies will end up
crossing paths with another company that is their competition. It is very important for
corporations to come up with strategies to distinguish themselves from the rest. The best way for
this to happen is for the company to put a brand on their product. There is multiple brand
elements that go into the branding of the Tesla Model 3. A brand element “are devices, which can
be trademarked, that identify and differentiate the brand” (Kotler, P., & Kellar, K., 2012).
Tesla Model 3 is Tesla’s way of trying to join the “throng of other manufacturers seeking
to sell mass-market battery-only vehicles” (Winton, N., 2016). For a company to be able to
separate themselves from their competition is one of the important aspects of their marketing.
Selecting a brand is imperative to the success of a company, in reality it is what consumers think
of first when they use the product. Tesla has many distinct brand elements that have assisted in
the success of their company. According to the author Cindy Wendland, there are “five key
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branding elements: brand position, brand promise, brand personality, brand story, and brand
associations” (n.d.). Tesla uses some of these in order to make them stand out against their
competitors. These competitors are “General Motors, Nissan, BMW, Renault, BYD, Hyundai,
and Volkswagen” (Winton, N., 2016), and with them being more commonly known companies,
Tesla has a lot against them. Tesla’s brand position is to be something that sets a tone with their
customer’s, they are known for being a luxury brand of vehicles. The Tesla brand has developed
a brand personality of being stylish, modern, and attractive. Tesla’s logo is said to signify the
following,
“style, elegance and innovations. At the same time designers decided to add some
authentic decorating elements. This is why the shape of the logo is made in form of an
armor shield. The idea was to mix modern high-tech tendencies which are reflected in
Tesla models with authentic feeling of safety and power” (Winton, N., 2016).
Tesla uses the branding element of brand story, by their name which is “after Nikola
Tesla who was a famous inventor and electrical engineer” (Winton, N., 2016), to give a bit of
history behind their name. Tesla also uses the element of brand associations, when consumer’s
think of Tesla the first thing that comes to mind is that they are premium electronic vehicles.
With all the competition that Tesla has nowadays they have to come up with different
ways to separate themselves from the rest. They have done this by creating a brand name for
themselves that make consumer’s remember them. They do this by using multiple brand
elements, in order to reach more consumers.
Brand Promise for the Tesla Model 3
Every company that has a brand promise has a promise to its customers that it seeks to
keep no matter what. Tesla’s brand promise to its customers according to their chairman and
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CEO is, “to accelerate the advent of sustainable transport by bringing compelling mass market
electric cars to market as soon as possible.”(Musk, 2013). Tesla wants to offer its customers a
reliable electronic car that is good for the environment. Another example of a company’s brand
promise is FedEx. “A few years ago, FedEx declared that it was the only choice “when it
absolutely, positively has to get there overnight”—an overt promise that still resonates today.”
(Frederikson, 2016). A brand promise seeks to differentiate one company from another.
Companies want to resonate with their customers and stand out above their competitors. “If a
business is confident in its abilities and has developed a compelling and consistent customer
experience, it can more easily differentiate itself and assume a market leadership position.
Clients will choose these businesses more often because they appear to offer more value.”
(2016). Tesla’s statement to offer electronic cars to the mass market means that it will be
affordable, reliable, and good for the environment. This is differentiating itself from the
competitors. One of Tesla’s competitors just mentioned its new product. “BEIJING (Reuters) -
China’s Le Holdings Co Ltd, also known as LeEco and formerly as LeTV, on Wednesday
unveiled an all-electric battery concept car whose production version the company hopes will
compete head-on with Tesla Motors Inc’s Model S” (Shirouzu, 2016). This is one of many
competitors that Tesla has, however, with the brand promising being different that this Chinese
model it may not affect Tesla.
Comparable Brand Promises
This new competitor in China that just announced its new electronic car has a similar
product but different brand promise. If you have ever visited China, you know that the
population is extremely high and the pollution created by these people is hurting our
environment. Many Chinese people do not care about the environment and therefore are not
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willing to pay extra to help it. LeEco’s brand promise is similar to Tesla in that it seeks to benefit
the environment by creating electric cars. However, the CEO has stated, “cars would be offered
free of charge to consumers because the company aims to make money on content and other
services it sells through those connected cars. Jia did not say when that day would
come” (Shirouzu, 2016). Tesla has more benefits that this company because it has a different
brand promise. Though they have the same idea and product, their approach is different. Tesla
seeks to encourage its customers to be more environmentally friendly with a state of the art car
that is contemporary and reliable. LeEco simply wants to offer a car that is environmentally
friendly and has unrealistic expectations for the future. With the target market for Tesla
becoming a younger, new age generation that really wants to have nice things that also benefit
the environment, Tesla is offering the target market everything that it wants. From new great
looking cars, to contemporary features such as electric and state of the art features such as self
steering, Tesla has many more features and benefits than its competitors.
Packaging and Labeling
Packaging and labeling play a huge role in consumer purchasing decisions, especially
with products that are sold on a shelf. For an uninformed customer, what makes them by one
product over another that is exactly the same: different packaging and labeling. Packaging
provides the company with an opportunity to differentiate their product using various packaging
methods, while labeling can be a little more difficult to differentiate, as it is usually controlled by
industry-related laws and regulations.
Packaging
The Tesla Model 3 would be considered a “specialty Product” because the consumer has
to put in effort to buy the one they want and the vehicles are not available easily. There are two
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types of Packaging: Primary and secondary packaging. Primary packaging is the part of
packaging the comes in direct contact with the product; Tesla doesn’t participate greatly in
primary packaging, solely because of the product they manufacture and sell. Secondary
packaging is the packaging around groups of pre-packaged parts. This type of packaging is the
external, visible kind of packaging and most likely consist of cardboard boxes, cartons, and
plastic crates. The Tesla Model 3 isn’t like a box of crackers, where it’s surrounded by
packaging, but when the car is being built, the pieces will come with protective packaging, and if
transporting the vehicle overseas, the containers would be considered its’ secondary packaging.
Some essential functions of packaging include: protection, containment, information,
utility of use, and promotion. Protection addresses natural deterioration, physical protection,
safety, and waste reduction. Since the Tesla Model 3 is a large product and very precisely built,
the main concerns with protection would by physical protection and safety. Transporting vehicles
that are around $35,000 has to be done well, with no bumps or scratches so the owner who
ordered the car, isn’t disappointed upon arrival. Tesla doesn’t participate in containment
packaging because they rarely package their vehicles together. However, when it has to be done,
it is either on a container ship or the 18-wheeler trucks that transport vehicles. Information
packaging attempts to spread the most amount of product knowledge to consumers. Again, as
Tesla is delivering the Model 3 upon request and order placements, the information function of
packaging can be lost and unnecessary. Utility of use is another function not used by car
manufacturers, because their products are not sold on shelves at grocery stores; Tesla does not
need the convenience of packaging because they are manufacturing specialty products. Lastly,
the promotion function of packaging is actively used as Tesla runs engineering tests, visual tests,
dealer tests, and consumer tests in regards to their colors, logos and brand image. Even though
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Tesla cannot use packaging to its full potential due to the product they are producing, they still
exhibit some packing function on order to launch the Model 3 and promote their brand image.
Labeling
Labeling is another aspect that can be difficult for vehicle manufacturers to fully utilize.
Labeling provides information the customer needs for purchase decision, or consumption of the
product. Most product labeling has to comply with industry-specific laws and regulations, like
ingredients, nutritional information, location of production, usage directions, and safety
precautions. Since the Model 3 isn’t a gallon of milk, their labeling functions are enacted
differently than standard products. Their labeling can be seen through advertisements with their
band logo, slogan, and capturing the essence of the Model 3; labeling can also be found at
dealerships and through promotional products they distribute.
Although Tesla, and a majority of other car manufacturers, cannot fully participate in
packaging and labeling because of their product type, it’s important for their marketing teams to
still develop and mold any packaging or labeling available to the consumer in order to create
desire for the product. Packaging and labeling can be the main focus of many standardized
products, but because of the price tag on the Model 3 and the overall product Tesla is offering, it
becomes obsolete in the marketing mix
Services
Support Services Buyers of Tesla Model 3 Want and Need
Tesla aspires to design electric cars with performance that surpass their gasoline
counterparts “with instant torque, incredible power, and zero emissions” and intend to produce
vehicles as “cars without compromise” (Tesla Motors, 2016). With this mission, Tesla sets itself
apart from its competitors within the automotive industry. As such, the leading electric vehicle
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manufacturer tends to attract consumers that also set themselves apart from most vehicle
purchasers. This unique set of consumers are known as early adopters as they “carefully search
for new technologies” and “are less price sensitive and are willing to adopt a product if given
personalized solutions and good service support” (Keller, K, et al, 2016, p.477). Early adopters
seek quality support services commensurate with their reduced price sensitivity. For Tesla
consumers, quality support services include the presence of ample charging stations, robust
warranty coverage, and Tesla’s continued commitment to its forward thinking culture.
In pursuit of meeting the demands of the early adopter demographic who have been
willing to spend the MSRPs for the Model S and X of $70K and $80K, respectively, Tesla has
constructed 682 supercharger stations for a total of 4,175 chargers available (Tesla Motors, 2016)
for free at public locations worldwide. Further, Tesla protects consumer investments with “a 4
year, 50,000 miles (whichever comes first) new vehicle limited warranty and 8 year, unlimited
mile battery and drive unit warranty” (Tesla Motors, 2016), which is a warranty package that
offers greater protection than many of its competitors within the automotive industry. Consumers
are ensured of Tesla’s continued commitment to its forward thinking culture through Tesla’s
continued developments in technology to include its solar powered battery pack for home use
and its development of autonomous driving technology.
With the pending release of the Model 3, Tesla is appealing to the needs of the early
majority demographic, as well. This demographic “adopts new technology when its benefits have
been proven” (Ketler K, et al., 2016, p.477). The early majority demographic requires the same
presence of ample charging stations, robust warranty coverage, and Tesla’s continued
commitment to its forward thinking culture. Additionally, the early majority consumer
demographic is more price sensitive relative to early adopters. With the Model 3’s anticipated
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MSRP of $35K and its warranty and charging station benefits extended to Model 3 owners, Tesla
is accommodating the needs and support service expectations of all of its potential consumer
demographics.
Support Services Offered by Competitors
Tesla’s competition is broad as it is inclusive of every car manufacturer within the
automotive industry. Tesla vies for the early adopter market share with other electric car
manufacturers such as Chevrolet and Nissan with their Volt and LEAF, respectively.
Additionally, Tesla competes for the early majority market share with all manufacturers of both
electric/gas hybrid models and all gasoline powered models. The early adopter market share has
been Tesla’s primary consumer base until the announcement of the release of the more affordable
Model 3. With its Model 3, Tesla intends to enter the market currently dominated by both hybrid
electric/gas and all gasoline powered automotive manufacturers. The current support services
offered by Tesla via the pending Model 3 to the early majority consumer demographic include
the availability of ample charging stations, robust warrant coverage, its continued commitment to
its forward thinking culture, and its relatively affordable MSRP.
Tesla’s main competitors for the Model 3 are popular hybrid electric/gas vehicles such as
the Toyota Prius and the Honda Civic which both have an MSRP of approximately $25K. The
Prius was released in the U.S. in 2000 and quickly became the “best-selling hybrid worldwide
during the past decade” (DOE, 2014) due to growing climate change concerns. The Toyota Prius
has a basic warranty that covers three years or 36,000 miles, whichever comes first and a
powertain warranty covering five years or 60,000 miles, whichever comes first (Toyota, 2016).
For the Prius battery, the Toyota warranty includes “either for 10 years or 150,000 miles (in
states with California emissions laws) or 8 years or 100,000 miles in all other states." (Toyota,
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2016). The warranties available through Tesla for bumper to bumper coverage, powertrain, and
battery replacement are all more competitive relative to that available from Toyota for the Prius.
Further, Toyota doesn’t necessarily exemplify a forward thinking and innovative culture with its
mission statement which claims to:
“..create vehicles by listening and responding to you. Why? Because it's our belief that
our cars should do more than help you go places on the road, they should also help you
go places in life.” (Toyota, 2016).
This mission statement is vague in explaining what Toyota’s vision for the future is and
what its inception was intended to accomplish beyond manufacturing vehicles.
How Competitors’ Support Service Affect Tesla
The Toyota Prius as well as many other hybrid electric/gas sedans have an MSRP of
$35K or lower. Additionally, while many warranties available from its competitors aren’t equal
to that available from Tesla, they are competitive enough to remain consistent with industry
averages. Further, many early majority consumers aren’t as driven by a company’s mission or
new technology when making an investment in a relatively expensive asset compared to those in
the early adopters demographic. These are all challenges that Tesla is anticipated to face in
entering the early majority consumer demographic via the release of its Model 3. To counter
these challenges, Tesla is placing an emphasis on affordability, luxury, performance, and
corporate responsibility through the manufacturing of its zero emissions Model 3 electric
vehicle. Through its multi-faceted focus, Tesla is likely to overcome the challenges presented
through its competitors support services.
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Post-Sale Service Arrangements Offered by Tesla
When a company launches a product for the first time, the intent is to provide a product
with no flaws or mechanical errors. However, with a machine as complicated as a car, it provides
difficult to launch a completely new design and engineering without a few hiccups along the
way. Tesla launch their new auto-pilot feature in their Model S vehicle, which had a few
malfunctions and caused several accidents post launch. Therefore, it is important for Tesla to
maintain service locations to accommodate engineering issues along with the standard
maintenance required of a vehicle.
As previously mentioned, Tesla globally operates 118 service locations as of December
31, 2015 (Tesla Motors, Inc, 2015). Car service can be accomplished at the company-owned
centers, or Service Plus locations. They also offer Tesla Ranger mobile technicians for problems
that do not require a vehicle lift. Since the vehicles are equipped to wirelessly upload data, the
Rangers can detect and solve issues without having to bring the car into a shop. The Rangers can
also provide personal service at-home or in remote locations. Tesla provides a four year 50,000-
mile warranty along with an eight year, infinite mile, warranty for the battery and drive unit.
There are several other warranty plans available beyond the standard two.
Tesla understands the importance of remaining supportive even after the initial purchase.
With the record orders hit during the soft launch, there will be significantly more Model 3’s on
the road than any other Tesla model; its critical that Tesla doesn’t get boggled down
manufacturing the Model 3’s to keep up with the demand, but also maintain and monitor the
activity at their service locations. If customers had problems on the road with the Model 3, but
cannot get adequate service, word-of-mouth advertising will negatively affect continued demand
for more Model 3’s to be manufactured.
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Since Tesla is a first-mover firm, an important part of their business model is to anticipate
areas within their company that need improvement or adjustments to fully support the demand
for their products. For Tesla to keep up with their increasing demand and large product launch of
the Model 3, they also need to provide more service locations throughout their distribution area.
Another option to handle the increase amount of claims while building new brick-and-mortar
locations is to hire and expand their Ranger program. Like any sales organization, there should
be designated areas that the Rangers cover in order to properly support all locations where Tesla
Model 3’s are driven.
Tesla also offers a well-designed warrantee program with new vehicle purchases; this
warrantee program should continue to be offered for Model 3 consumers. The warrantee helps
elevate and manufacturing problems that may arise for the new consumer. Even though it may be
frustrating dealing with these problems, it is beneficial for the customer to utilize the services
Tesla provides without having to pay.
When a customer utilizes a service feature offered by Tesla, it is important that Tesla
offers a standard of quality. In general, these service centers should offer reliability,
responsiveness, assurance, empathy and tangibles. Reliability is the ability to perform the service
dependently and accurately; Model 3 owners don’t want to be off the road for an extended period
of time and therefore value the reliability of the service. Responsiveness is the willingness to
help customers and provide prompt service. Since the Model 3 can technically be considered a
luxury product, the service and repair process should coincide properly with the purchase
process, meaning the way customers a treated, the quality of service provided, and the timing
involved. When one has to service their vehicle, and especially a vehicle as specific and
technologically advances as the Model 3, it is important that to customer has assurance that the
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service and repairs will be done properly and the engineers have quality training. This idea also
works with empathy; a Model 3 owner would want their service to have individualized attention
and know their car is being treated with the utmost care. The last aspect of tangibles is the
appearance of physical service locations. The appearance needs to align with Tesla’s business
model and instill reliability, responsiveness, assurance, and empathy. In order to manufacture
Model 3’s at an alarming rate, Tesla needs to maintain these important service aspects in order to
further gain more buyers and build their brand image and reputation.
How Repair/Service Efforts Affect Customer Satisfaction
Customer service is extremely important to a company when seeking to develop a
reputation amongst current and potential customers. “Repeat sales are not accidental, according
to the Small Business Success website. Instead, they occur due to a relationship you’ve
developed over time through providing superior customer service” (Joseph, 2016). With good
customer service, companies are able to show their customers that they value, and appreciate
them. In the same way, poor customer service can create the opposite effect. Most people are
able to remember one particular company that provided them with terrible customer service and
one company that provided them with excellent customer service. Tesla, according to the USA
Today was given the highest customer service rating. “In fact, Tesla Motors received the highest
owner satisfaction score in Consumer Reports' annual survey last year. According to the
magazine, "Owners of the Tesla Model S gave it the highest owner-satisfaction score Consumer
Reports has seen in years: 99 out of 100” (Fool, 2014).
Tesla is not like typical companies with a 24-hour customer support calling center or an
overseas calling center to save money on costs. Tesla approaches customer service differently
through social media and personal relationships. Customer service and brand loyalty are tied
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hand in hand. Tesla goes above and beyond to show its customers that they not only care about
their customers, but they promote something that is important for the environment. According to
USA Today, Tesla has made an enemy with the average gasoline powered cars, promoting the
electric cars. This enemy type mentality is a great marketing tool that is also seen in Apple verse
Microsoft PC. “Another way that psychologists explain brand loyalty is through emotional
connection. All of the most recognizable brands today have one thing in common: They make an
emotional connection with consumers” (Fool, 2014). Through this emotional connection a
friendship is created and customer service is established on a deeper level. Tesla is aware of the
importance of customer service and has showed this to its customers over and over again.
Pricing
Price Adaptations Tesla Should Include in its Marketing Plan
Most people associate buying a car, with inflation, negotiations, and hassle. According to
(Keller, Kotler 2012) purchase decisions are based on how consumers perceive prices and what
they consider the current actual price to be-not on the marketer’s stated price. Typically, price is
what starts the negotiations. Tesla’s price adaptation into its marketing plan came from these
theories, leading them to develop the direct sale approach thus cutting out the middle man to
provide their customers with savings. While most people associate a higher price with a higher
quality Tesla’s goal is to build a car cost effectively and come in price of under $35,000 with a
$7,500 Federally mandated incentive for buying an electric car. Tesla understands that in order to
flourish in a highly competitive industry, the cost of ownership needs to come down and the
information needs reflect the quality.
Tesla sees their survival to be, leading the way in innovation when it comes to the
development of a fully electric car. They determined the demand for the model 3 off of the
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growing EV/Hybrid market. They seek to maximizes their profits by offering more than their
competitors with the expansions of supercharger stations. The profits they have earned on
previous models have been put back into the company to allow them to develop an even more
affordable car. Tesla has conducted an extensive survey that consisted of 29 questions that
spanned from gender, demographics, money spent on gas, current vehicle, and if they see
purchasing an electric car as a good investment. Based off the results they found that brand
image is very important to consumers. This survey also allowed Tesla to determine the target
market interested most in an electric vehicle and plan for potential drawbacks that might be
associated with the purchase of an electric car.
Changes Group 4 Would Make in the Pricing of the Tesla Model 3
When it comes to selling any product one of the most important aspect is pricing. There is
a lot of things that go in to the pricing process of an item and the pricing for Tesla Model 3 is no
exception. The Model 3 is said to cost less than their competitors, in order to break in to the
mass-production market. According to the text Marketing Management, there are 5 major
objectives to consider when determining pricing; “they are survival, maximum current profit,
maximum market share, maximum market skimming, and product-quality leadership” (Kotler, P.,
& Kellar, K., p.469, 2012).
Some of the known competitors of the Tesla Model 3 are, “General Motors, Nissan,
BMW, Renault, BYD, Hyundai, and Volkswagen” (Winton, N., 2016). In order to compete
against these competitors Tesla is pricing the Model 3 at a “cost $35,000 before tax incentives”
and “priced with options would cost $42,000” (Branman, M. and Hard, A., 2016). If there were
any changes that could be made on the pricing for the Model 3, we believe that it should be to
the base price; it should not depend on the tax incentive to lower price. The base price should be
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at $28,000, and the price with the options should be no more than $38,000. This is because the
pricing of their competitors vary from “$31,000 for the BYD e6” to “$42,000 for the BMW M3”
(Winton, N., 2016).
Promotions
Integrated Marketing Communication (IMC) Mix Components used by Tesla
The American Marketing Association defines integrated marketing communication (IMC) as
“a planning process designed to assure that all brand contacts received by a customer or
prospect for a product, service, or organization are relevant to that person and consistent over
time” (Keller, K, et al, 2016, p. 599).
To this end, marketers must ensure consistent branding on all available media platforms
“to provide clarity, consistency, and maximum impact of messages” (Keller, K, et al, 2016, p.
599) to the public for a product or service. In doing so, marketers convey a unified message
about their product or service in both online and offline advertising content. The uniformity in
advertising content through IMC improves a company’s “ability to reach the right customers
with the right messages at the right time and at the right place” (Keller, K, et al, 2016, p.601).
Tesla’s IMC
Compared to almost all retailers, vehicle manufactures and otherwise, Tesla utilizes a
different approach to marketing. Instead of asserting the benefits of its products to the public
through integrated marketing campaigns, Tesla simply manufactures luxury electric cars and lets
the public and media generate free word of mouth. In pursuit of generating positive word of
mouth, Tesla has recreated the car buying experience by removing the presence of dealerships,
commission earning sales representatives, and price negotiations. Many consumers don’t prefer
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the traditional care buying transaction and as a result it “has remained unpopular for decades: the
typical car dealer receives just 2 or 3 stars on Yelp” (Science of Revenue, 2016).
Most retailers have either a contracted marketing firm or an internal marketing division
that consists of “package-design consultancies, Web site developers, social media experts, and
direct mail house” (Keller, K, et al, 2016, p. 600) to facilitate consistent branding across all
marketing platforms. Tesla Motors, on the other hand, “has no advertising, no ad agency, no
CMO, and no dealer network (Advertising Age, 2013). Tesla is able to generate sales revenue
and grow due to the early adopter demographic of consumers whose purchasing decisions are
motivated primarily by new technology over price. The positive word of mouth generated by
early adopters has allowed Tesla to invest in the development of more affordable cars which has
prompted media attention to provide free marketing to Tesla.
How Tesla Should Use IMC
Tesla’s lack of a paid marketing plan has generated a sense of novelty associated with the
product. The Tesla models run using state-of-the-art technology and are only sold on a made-to-
order basis. Further, all Tesla owners are required to invest in a deposit in order to reserve the
possibility of owning a Tesla model several months or years later. As a result of these
manufacturing factors, a Tesla sighting and any news about the company automatically generates
interest and excitement.
Currently, excitement over Tesla developments is shared primarily among consumers
who are attracted to the benefits associated with driving a high performing zero emissions
vehicle. However, there exists a relatively large demographic of consumers who only require a
mode of transportation within a limited price range. In order to appeal to this more fiscally
constrained consumer base, Tesla should utilize social media marketing as well as offline
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marketing such as magazine and billboard advertisements. In integrating these online and offline
platforms, Tesla can convey the unified message of affordability of its products over the span of
many years given Tesla’s outstanding warranties and elimination of fuel expenses.
Advertisements to skew the public perception that Tesla models are beyond many consumers’
budget via IMC can expose Tesla to an entirely new consumer demographic.
Internet Marketing for Tesla Model 3
Content pending…
Social Media Marketing for Tesla Model 3
Since the beginning of the digital-age, marketing managers and teams understood that
marketing structure was about to change monumentally. With the creation of the Internet, a
plethora of marketing possibilities opened up for firms looking to gain a competitive advantage.
By analyzing the product launch of the Model 3 and comparing it to other car manufactures
decades ago, it’s clear how much the Internet has benefited organizations who have mastered the
art of marketing online. Tesla was one of the first companies within the automotive industry to
launch a family-affordable, environmentally sustainable sedan solely from an online platform;
ultimately, the online product launch has benefited Tesla in great ways and will hopefully work
seamlessly with the consumers as well once they have received their product. By only providing
order-based Model 3’s, Tesla will be able to maintain lower inventory levels and minimize risk.
They also have the ability to place orders for specific amount of raw materials and utilize any
benefits from ordering precise amounts of materials in bulk. The key for Tesla to maintain future
success through their online marketing channel involves several aspects.
With an online product launch and source of future orders, it’s important to keep the
customer happy and monitor their suggestions and concerns. The web is at the fingertips of so
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many people worldwide, therefore the customer has the position to determine the online brand;
this strategy requires the organization to be interactive with their clients and adapt to their needs.
Since internet marketing is primarily the main source of purchases already for Tesla, it is
pertinent that they continue to strengthen and monitor online activity and update their website on
a regular basis. A possibility for managing consumer needs is to leverage a live chat option;
especially because Tesla has limited brick and mortar stores, speaking face-to-face with a sales
rep doesn’t happen as often, like with buying a Ford or a Chevy. Tesla should want people who
are interested in buying the Model 3 to have confidence in their purchase and receive an
adequate amount information through a Model 3 representative. Also, because a majority of
Tesla’s operation is based online, test drives are often hard to come by without a significant
amount of travel. By creating a website as interactive as possible, it would help make faster
consumer decisions when weighing the purchasing options. For a consumer to learn as much as
possible about the Model 3, utilizing social media outlets becomes another tool in the online
marketing platform for Tesla.
Social media has redefined knowledge sharing around the world; within seconds, people
thousands of miles away can learn of current events as soon as they happen. This instant
knowledge base can be beneficial for a company in the growth stages and want to get their name
out quickly to a mass amount of people. However, it can also be detrimental if the wrong review
goes viral or there is media coverage of a product failure, for example. There is untapped
potential for the model 3 on social media because Tesla is still in the production stage of the
vehicle. Therefore, once the first batch of Model 3’s are delivered to the waiting customers, there
will be a spike in social media coverage of this technology-advance car at an affordable price. As
long as Tesla actively monitors the posts and strive to satisfy their customers needs while
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maintaining safety and expectations, they can successfully utilize the existence of social medial
within the marketing strategy.
Value for Tesla Model 3 to Customers
Just a few years ago you could have asked anyone in the world what Tesla was and no
one would have been able to answer the question. That’s because Tesla didn’t even exist a few
years ago. Now, “In California, they became the third biggest selling luxury car, behind only the
Mercedes E Class and the BMW 5 Series” (Reynolds, 2013). Tesla has had unique and different
promotional techniques pushing them up on the luxury car list. Unlike regular car dealerships
Tesla has show rooms instead of car lots. These show rooms are also unique in themselves. “For
starters, they are not located along main roads like every other car dealer, they are in shopping
malls – right alongside brands like Zara, Bloomingdales and Sees Candy” (2013). By placing
their showrooms in places like malls, they are able to reach customers from all areas. The
number of people that walk by Tesla showrooms is much greater than those of regular
dealerships because of the location. “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” (2013). With these
unique promotional techniques Tesla is growing its name in all areas of the world.
Not only are their promotional techniques successful, they offer value to their customers.
The values from Tesla’s promotional techniques lie with the benefits to their customers. Tesla not
only offers a product that its customers love, but they are willing to build a relationship to do so.
This promotional technique emphasizes the value it has on the satisfaction of the customer. Aside
from benefits and features that the Tesla Model 3 offers, the newest model is the most affordable.
Since Tesla customers value the environment and the desire to be eco-friendly, the new
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affordable model 3 is able to offer environmentally friendly cars to a much broader customer
base. When it comes to determining if Tesla truly offers value to its customers, you must ask the
customers. “Unlike traditional automakers such as Ford and GM, Tesla doesn't have a massive
advertising budget, nor does it conduct multinational marketing campaigns. Instead, Tesla relies
on word-of-mouth marketing and mall showrooms for selling its cars. This works because of
Tesla's tremendous brand loyalty” (Fool, 2014). Tesla’s brand loyalty proves that Tesla values its
customers. If customers did not feel valued by their purchase through Tesla, they would not
remain loyal to the brand.
Socially Responsible Marketing (SRM)
Socially Responsible Marketing
Over the years socially responsible marketing has become more prevalent. Consumers
have raised their expectations of what they want out of a company and/or product and are willing
to boycott if those needs are not met. Consumers are looking to make a difference and want to
know that their dollar is going towards something worthy. For a company to become socially
responsible they must engage in proper legal, ethical, and social responsible behavior. Legal
being that their employees must obey the laws, no lying or misleading consumers just to make
the sale. Ethical being honoring a written code of ethics to build the companies goodwill.
Socially responsible behavior is about what is best for the environment and giving back.
Since 2007 Toms founder Blake Mycoskie has been giving back and providing their
consumers with the platform to do the same by offering one for one. Toms one for one, one pair
of shoes purchased equals one pair of shoes given to a child in need, is an example of a company
who is successfully engaging in socially responsible marketing. The Toms company strives for
people to understand that they can make a difference by informing them of the challenges
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children face by not owning a pair of shoes. For children without shoes means the possibility of
infection, injury, and the possibility of no education. Many will never know what it is like to
never own a pair of shoes but the Toms campaign has broadened many companies socially
responsible marketing by encouraging others to give back. Through Toms one for one, many
other companies like AOL and Huff Post, have also sought to make of difference by expanding
of that to develop the Barefoot Challenge. To date 60 million pairs of shoes have been given to a
child in need.
Starbucks is another company that is practicing socially responsible marketing. Starbucks
strives to create a global social impact around the world through their development of C.A.F.E
(Coffee and Farmer Equity). Starbucks sees this as a positive change and an ethical source of
sustainable products. C.A.F.E consists of four categories; Quality, Transparency, Social
Responsibility, and Environmental. Quality in that all coffee must meet the standards of “high
quality”. Transparency consists of suppliers providing proof that the money Starbucks pays for
coffee will go back to the farmers. Social Responsibility is practiced through a third party that
ensures all the rights for workers are met as well as ensuring they have a safe, humane working,
and living environment. Environmental is measured through the proper disposal of waste, the
protection of water quality, water is conserved, and the strive for a reduction in agrochemicals.
Starbucks believes that through C.A.F.E they can provide the highest quality to their consumers
while also contributing to a sustainable future.
How Tesla Can Become More Socially Responsible.
Content pending…
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Conclusion
Content pending…
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