Instead, Tesla devised a pricing strategy that took advantage of their ideological brand, using a mixture of psychological and pricing theory and data-driven target market segmentation. For example, the Model S MKTG 396v8 Assignment 2 February 2, 2018
starts at $68,000, but fully loaded models sell for almost $160,000 . Tesla couldn’t price every vehicle at $160,000 or its sales would be too small to even cover development costs. It needed to promote a model that would work on a greater scale, which its new model 3 promises to promote, but even that goal is served by the current pricing strategy. If Tesla had charged the same price to every buyer, smaller sales volumes would have required that price to have been even higher than for the premium models. Uniform pricing would have resulted in a worse outcome not only for the company but also for its customers. There are many sides of Tesla’s communication strategy that deserve discussion, but the most interesting is their incredible power from a social media marketing perspective. It was founded only 15 years ago, makes little money compared to auto giants, and yet on social media, it's in the top 3 – outdoing Volkswagen , Ford and Toyota (Folschette, 2017). Historically, bigger companies always outperform their smaller competitors, and while there are exceptions, it is almost unheard of for a company that is just about 30 times smaller than its rivals to perform so well. Tesla’s distribution strategy uses its own marketing and sales teams to transport its products to target consumers. Customers can buy Tesla cars exclusively through the Tesla website or at company-owned stores. Any other way of purchase will result in failure. This strategy gives Tesla complete control over their marketed products. Looking at all these strategies, I would say that the only improvement I could see Tesla making is the use of paid advertising on social media. They have already become so adept at using these platforms to engage their ideal target market that they should enhance this through the use of paid ads. However, I MKTG 396v8 Assignment 2 February 2, 2018
know that Tesla is one of the fastest growing brands in the world and they have come so far without paid ads, so I believe that they are doing what is best in the current moment, and will continue to do the best they can in the future. BMW Group has been a premium player in the market since they were first introduced, presenting high end luxury automobiles which are now seen as a status symbol. All their products are priced at a premium compared to its rivals in the category. Connected brands like Mini Cooper and Rolls-Royce also convey the same pricing strategy of the company, and are even priced a bit higher that the standard BMW product range. BMW has established luxury pricing to classify itself into the “desired” segment of the market. This pricing strategy in its marketing mix also ensures that the brand does not get watered down, or the positioning of the brand become uncertain.
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