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Unformatted text preview: Tesla Report
Beth Louise Bage
Student Number: 15021838
Word Count: 2,198 MSc Digital Marketing
Newcastle Business School
Northumbria University 13-01-2020
Strategic Marketing in the Digital Era
Kirk Dodds Introduction
Tesla is an American automotive and energy company who specialise in manufacturing high
performance electric cars. Tesla was founded in 2003 by a group engineers; Elon Musk, Martin
Eberhard, Marc Tarpenning, JB Straubel and Ian Wright. They wanted to prove that they did
not need to compromise to drive electric vehicles and wanted to show that driving electric can
be better, quicker and more fun compared to gasoline cars (Tesla, 2020). Tesla strongly
believes the quicker we stop relying on fossil fuels and move towards a zero-emission lifestyle,
the better the world will be (Tesla, 2020). Elon Musk, current CEO, stated that he envisions
Tesla as a technology company and independent automaker, aimed at eventually offering
electric cars at prices which are affordable to the average customer (Therealzeitgeist, 2020).
After ten years in the market, Tesla was ranked the world’s best-selling car manufacturer in
2018, as a brand, and an automotive group with 245,240 units and a total market share of
12% (Therealzeitgeist, 2020). Tesla currently dominates the U.S. electric car market as their
Model 3 was the most sold electric vehicle of 2019, standing with Chevrolet Volt in second
position (see Fig. 1) Fig. 1 (Tesla Swot Analysis, 2019) shows the number of electric cars sold in 2019 2 1 Theme & Trends
The digital theme I have decided to base my analysis on is routes to market and multichannel
strategy. Routes to market and multi-channel strategy describes the range of methods used
by an organization so their product or service reaches their consumers. It means always being
where your customers are, by using a variety of online and offline channels to effectively target
and engage with your audience (Llewellyn, 2019). The digital trends I have selected are
Influencer Marketing, Video Marketing and Artificial Intelligence. Influencer marketing is the
classic celebrity endorsement but placed into a modern, content-driven marketing campaign.
Influencers are individuals with refined personal brands who have trusted audiences. In recent
years, influencer marketing has proven to be the fastest-growing method of influencing
consumer purchases. It was a $2 billion-dollar business in 2017 and is forecasted to be a $10
billion-dollar business by 2020 (See Fig. 1). Video marketing is a forward-facing marketing
strategy that integrates engaging content in marketing campaigns. It can be used to build
brand awareness, promote a brand, product or service or to engage with customers
(Stringfellow, 2017). The recent advent of 360-degree video content allows customers to
control their perspective, creating a more immersive experience (Rinaldi, 2019). Artificial
Intelligence is the sub-field of computer science and how advancing technology can be
human-like. It is the theory and development of computer technology, allowing programs 2to
perform activities that normally require human intelligence such as translation between
languages, speech recognition, visual perception and decision-making (Marr, 2018). Chatbots
and bot technology are playing a much larger role in customer experience, the combination of
the two provides the ability to enhance service provision (Watson, 2019).
Fig. 2 (Mediakix, 2019) outlines the influencer marketing spend from 2015-2020 3 3 Target Market
Tesla owners are typically wealthy business executives and entrepreneurs who are between
the ages of 35-50 (Pressman, 2016). They are early adopters in upper-middle class (Zucchi,
2015), in which consumers have a high level of income (Bevis et al, 2013). Many owners tend
to be in California where the cost of living is above average (Tesla Owner Demographics,
2019). Individuals in this group are mostly males who are looking for a premium, luxury vehicle
and are willing to pay more for an eco-friendly vehicle, to help reduce pollution (Bevis et.al,
2013). Customers in this segment view Tesla products as a prestige part of their lifestyle
(KPMG, 2015) and they proudly support a company that is actively combatting climate change.
They share similar values to Tesla as they are interested in being ecological and sustainable
transport plays an important factor in their lives (Bevis et al, 2013). 4 Influencer Marketing
Although other automotive giants use influencer marketing, such as when Mercedes-Benz
partnered with YouTuber Casey Neistat (Mediakix, 2019), Tesla use a more organic approach.
They do this by leveraging popular social media accounts through their CEO, Elon Musk, in
line with their strict $0 advertising strategy (See Fig. 3). Musk is very available on social media,
especially Twitter, and utilizes communication with brand fanatics, often retweeting their posts
about Tesla and answering questions to build hype of the release of new products and
company expansion. The impact Musk has upon Tesla is massive due to his vast following of
30.6M (Twitter, 2020) compared to Neistat’s 2.06M (Twitter, 2020). This means that Tesla do
not need to use paid advertising like most other car giants do, due to the high level of exposure
they receive through Musk’s social channels (See Fig. 3). This trend is important to the target
market identified in part two because, people have a difficult time trusting a brand, but when
an influencer talks about the brand, people find it easier to believe them (Nieslen, 2015). 4 Fig. 3 (Mediakix, 2019) outlines average advertising spends in the automotive industry in 2015 Fig. 4 (Jovancic, 2018) shows the percentage of social discussion of electric vehicles, outlining
that Tesla is the most popular In the past, brands like Toyota have used influencer marketing, like when they worked with
Instagram influencer Kelly Lund and his influencer dog Loki to promote their 4Runner model
(Mediakix, 2019). With deals netting $10 per thousand followers per post, with 1.3M followers,
Loki was making $13,000 for a photo (Brookhart, 2016). In comparison to this, Tesla have a
unique position in the market, as they have created a personal connection to the brand through 5 their CEO, who has created personal connections with its customers (Vann-Adibé, 2016).
Tesla uses content marketing in a small-form media that is spread widely by Musk’s huge
following, therefore they do not need to invest into paid advertising.
Musk’s involvement as acting influencer of Tesla could prove to be harmful to the brand if he
were to do or say something wrong. For instance, if an influencer did something wrong, a
brand can publicly cut ties with them. However, Tesla cannot cut ties with Musk due to his
superior position in the company. An example of this was when Musk smoked marijuana on a
popular podcast with Joe Rogan, in which stock of Tesla dipped seven percent (Stemile, 2018)
and chief accounting officer, Dave Morton resigned due to the level of public attention the
company received (Wald, 2018). In another incident, Musk was forced to step down as
chairman of Tesla although he maintained his position as CEO. This outlines a negative of
having an influencer of a company who is so close to the brand. In relation to this trend, Tesla should continue to utilize Musk as an influencer, as his large
social media activity proves to be crucial for the future performance of the brand (Folschette,
2019). His high celebrity status makes it easy for him to spread the word about anything
interesting happening at Tesla across his social media channels, allowing for an effective no
paid advertising strategy. Musk’s positive exposure helps to build trust in Tesla as a respected
voice speaks out to the consumer base.
5 Video Marketing
One trend that is on the rise and sure to stand-out is 360-degree filming, which is a concept
that provides an immersive experience for the consumer. Videos at the awareness stage are
said to help drive consumers towards a website and increase conversion rates, with 53% of
consumers visiting a brand website after watching a video on social media (Carter, 2019). This
trend is important to the target audience identified in part two, as individuals from this segment
prefer video than any other channel as a means for collecting information on a product or
service (Curry, 2016). Tesla opts for sharing videos through Instagram of their products in-action, either driving, or
at events. Their candid Instagram account is best known for being authentic and open to
connecting with their followers and consumers (Hogan, 2018). In comparison, Ford tends to
post more conventional, staged images on their account. Although Tesla rarely utilise this type
of content, there are many YouTube channels and podcasts devoted to Tesla. They make use
of this free marketing from owners and fans online, which keeps in line with their zero-dollar
advertising strategy. However, regarding the electric car market, Tesla is facing increasing 6 competition from auto giants, all of whom spent an estimated $9.3 billion in 2018 (Isidore,
2019). Nissan capitalized on this video marketing trend by creating a 360-degree ad to
promote their Rogue model. Since the ad, sales increased by fifty per cent in 2017 compared
to the previous year (Shuttershock, 2017). Most recently, Facebook has made 360-degree
technology available (Calero, 2015), which is likely to be an upcoming social media trend.
Tesla could be an early adopter of this trend which would be strategically advantageous for
attaining their innovative positioning in the marketplace. Utilising 360-degree filming where
customers can view models online would effectively engage customers through the purchase
funnel (Coppola, 2018) due to the decision of Tesla closing half their retail stores in Chicago,
Brooklyn, New York and Tampa (Hern, 2019), as they move towards an online-only sales
model. 360-degree filming will create realistic comparisons of the real thing, where consumers
have an immersive experience to see what the product really looks and feels like, connecting
them closer to the product (Caffyn, 2016). Although this will be expensive and does not keep in line with their $0 advertising strategy,
this will allow Tesla to remain competitive in the long-term as advancing technologies could
set to replace physical showrooms in the near future (O’Hare, 2016), eliminating costs such
as rent and wages. However, this would need to be optimised for mobile use as 52.5% of
consumers use mobile versus desktop when online (Broadband, 2019). It is predicted that by
2021, 75% all mobile traffic will come from video content (Marshall, 2016), therefore video
content must be optimized for smartphone use to improve the user experience and overall
Fig. 5 (Carter, 2019) outlines the online video viewing and ad spending forecast in 2021 7 6 Fig 6. (Koetsier, 2019) shows the budget allocation for paid media among major car brands 7 Artificial Intelligence
As online communication continues to evolve rapidly, Artificially Intelligence chatbots are
growing in popularity and 80% of businesses aim to implement a chatbot by 2020 (Apurv,
2019). Chatbots are the future of marketing and customer service, which will present new
opportunities in customer service for Tesla. This trend is particularly important to the target
audience identified in part two as typical individuals from this segment prefer a chatbot for
discussion than any other channel (See Fig. 7).
Fig. 7 (Tidio, 2019) shows that the 35-50 target audience tend to use chatbots as their
preferred channel of communication 8 8 With Tesla’s current employee policy stating that calls and emails should be answered under
five minutes (Tesla, 2020), this could prove to be expensive or may not be viable in the future,
as they continue to increasingly grow and expand their consumer base. If the customer has
to wait for a response, this may hurt the brand image. 87% of customers said that their online
interactions with a brand made a positive influence on purchase decisions (Social Report,
2017). Although no other car giant has adopted this trend into their customer services yet, it is still in
the early days (Kim, 2019). Tesla previously introduced the ‘TeslaBot’, the virtual assistant
that lets you interact with your car on a desktop (Chang, 2017). In order to remain competitive
in the market, Tesla could look to be a leading adopter of online AI chatbot to converse with
9 consumers. In terms of customer service, the implementation of a chatbot service will allow Tesla to
communicate effectively with customers whilst eliminating the need for labour during the
interaction, saving costs in terms of wages. It will provide a personalized experience where
the customer will receive responses in a speedy service, providing solutions to their queries.
Although chatbots may require significant investment in the short term, Tesla previously
announced their shift towards an online-only sales model (Ferris, 2019). It would be beneficial
in the long run as it looks to replace human customer service and will allow Tesla to streamline
their ability to service customers in relation to the increased demand, providing a seamless
customer experience. As chatbots work from a limited database, it is possible for the bot to become confused if a
customer query does not relate to something it has previously learnt. This may result in the
customer query not being answered and the customer not gaining the results they hoped for,
leading to frustration and a lack of trust and loyalty in the brand. 73% of customers stated they
would not use a chatbot again after just one bad experience (Kannan, 2019). Tesla is
associated with being a technological company, in which the customer would expect a high
level of expertise regarding AI due to their implementation of autonomous driving in their
products. Therefore, any problems with chatbots online would have a bigger impact and
potentially be scrutinised more than any other autocar giant in the market. 10 9 References
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13 Comment Summary Page 2
1. Detailed introduction
2. Consider link this back to Tesla
3. Source of this chart
4. Nice range of variables
5. In what way does it speak to the consumr base?
6. Good justification from research
7. Source of tabble
9. God aplication
10. missing aconlcuson ...
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- Spring '11
- Marketing, Tesla Motors, Electric car