Engineering entrepreneurs Martin Eberhard and Marc Tarpenning founded Tesla in 2003 in Palo Alto, California. Elon Musk, who had earned $165 million from the sale of his stake in PayPal in October 2002, led the Series A round of funding of $7.5 million in 2003 and became chairman of the board in 2004. None of the ‘ ‘company’s original leadership team had a background in the automotive industry. In 2007, Tesla experienced cost overruns on its first EV, the Roadster, and by the end of the year, had had three CEOs, including co-founder Eberhard. Musk, who by that point had invested $55 million in Tesla,
Donald Sull and Cate Reavis May 1, 2019, 11 appointed himself CEO in October 2008 saying, “””‘That’s part of the reason I decided to take over as CEO. I have so many chips on the table. I need to steer the boat completely”.” 108 ‘Tesla’s nine-person board included several members with close ties to ‘Musk’s various business interests: the CEO of Solar City (‘Musk’s cousin), the CFO of Solar City, and two directors of ‘Musk’s rocket company SpaceX.109 The company had witnessed the departure of several key managers in 2018, including the VP of engineering and two high-ranking engineers who worked on the ‘company’s automated production line. Tesla had roughly 34,000 employees worldwide, including 10,000 who worked in the ‘company’s manufacturing plant in Fremont, California, and 1,000 at its battery and motor Gigafactory in Nevada.
The company went public in June 2010 at a price of $17 per share, and by August 2018, the stock was trading at $335 share, putting its market capitalisation higher than GM’s. (There had been no stock splits.) Tesla recorded its first profitable quarter ($11 million in net income) in March 2013 and booked profits a second time in October 2016 but posted losses for every other quarter. (See the Tesla financial tab in the Tesla case workbook.) Many investors were sceptical of ‘Tesla’s long-term viability and bet that its stock would drop in price.1
A Strong Brand Without Traditional Marketing
Tesla has become disruptive for many things. But one of the biggest surprises is the company’s decision to forego traditional advertising campaigns. When was the last time you saw a TV commercial, website banner ad, or billboard pointing you towards a Tesla?Tesla’s anti- advertising strategy has (ironically) made them one of the fastest-growing automakers in history. And it turns out Tesla doesn’t do traditional Public Relations either. Yet, everyone (it seems) now knows Tesla. So, if Tesla steers clear from traditional ads and PR, how has the company been able to embed itself so firmly into our public psyche?
Focus On The Product
The company channelled their efforts (and budgets) into simply making a better product. Despite all the sceptic and negativity out there, in the real world, ‘you’d have to look hard for a Tesla owner who ‘isn’t excited about driving electric. Tesla tends to funnel its cash back into ever-more-disruptive growth across the board. By shunning the franchise dealership experience, delivering next-gen technology, providing non-stop software updates, and building a robust Supercharger network, Tesla has been able to create an abundance of excitement around the brand.
Emphasis On Innovation
Given the high speed at which Tesla innovates and the multi-faceted nature of their business, it would be hard for a legacy automaker to keep up in the news cycle the same way Tesla does with its new cars, new tech, and 360-degree clean energy solutions. Just look at the number of things that Tesla is working on: Cybertruck, Roadster, Semi, ATV, FSD, software updates, construction progress at Giga Shanghai, Giga Berlin and Giga Texas (soon Giga India), solar roof, energy storage, battery developments, and a much-anticipated $25,000 compact car. ‘That’s a plethora of future projects and I am sure I missed a few things.
Elon And Twitter
Quick, ‘what’s the name of ‘Mazda’s CEO? Honda’s? BMW’s? I imagine that you probably ‘couldn’t name them. But I’m sure you know who Elon Musk is — and not simply because you’re a fan of Tesla or EVs in general. In fact, according to friend or follow, Elon Musk is the 30th most followed person on Twitter in the world with a jaw-dropping 44 million followers.
I can assure you Tesla has not delivered 44 million cars (yet). Simply put, ‘Musk’s activity on Twitter does more than any Super Bowl ad ever could. He’ll share memes. Respond to questions. Break news. And provoke conversation (and, of course, sometimes controversy). Rather than a stiff corporate account run by some stodgy PR outfit, we get Tesla updates straight from the Iron Man himself. Elon generates plenty of excitement surrounding the company. There is simply no CEO out there who’s more connected within the Twitter-sphere.
Most legacy automakers tend to reveal their new models at auto shows (with 2020 being an obvious exception to this rule). Regardless, anytime Tesla needs to unveil a new car, they hold their own event. Typically, leading up to the event, Tesla fans will try to predict what might be revealed. Invites often go to Tesla owners and influencers, so social feeds are chock full of each ‘attendee’s unique experience. Opening up the event to owners and influencers is a definitely a credible way to build up loyalty and, in turn, those same folks tend to give some of those good vibes back to Tesla. In addition to new car launches, Tesla also unveils new tech advancements at events. Two years ago, we had Autonomy Day, last year we had Battery Day, and it seems like this year we may see an AI Day.
Word Of Mouth
Tesla also appreciates word-of-mouth — the company has used a referral system to spread the good word for years. Giving prizes to owners who received referrals incentivised them to talk openly about their vehicle purchase decisions. In addition, people are curious about EVs. So being an EV owner in an ICE world really doesn’t make sparking up a conversation all that difficult. After all, no one really talks about how much they savour pumping their car full of gas.
For the time being, it ‘doesn’t appear to be necessary for Tesla to carve out a budget for traditional advertising. That said, there’s probably a place for non-traditional ad spend (maybe a documentary film?) aimed at educating people about electric cars. Unfortunately, disinformation campaigns against EVs are still rampant. So, there’s still so many folks out
there who are misinformed about EVs and refuse to even consider such a shift in lifestyle. Whether Tesla takes it upon themselves to educate the masses with specific advertising efforts remains to be seen. But for now, most seem to be happy that they’re reinvesting for growth Tesla Giga factories, Superchargers, Services Centers, and (of course) their cars.
QUESTION 1 (30)
Personal selling is a form of selling that many companies rely on heavily to promote and move their products. In light of this statement, give a comprehensive analysis on how Elon Musk used his personal brand identity as a unique personal selling point, part of your answer must further highlight the advantages and disadvantages of this approach
QUESTION 2 (30)
Assuming you have been appointed by Tesla as its new Marketing Director, your immediate task is to grow the company brand reach beyond the social media platform. Therefore, with aid of practical examples, construct a detail marketing communication strategy that you will employ and implement to ensure success.
QUESTION 3 (30)
Effective public relations functions can also promote your organisation, help communicate during a crisis or defend its reputation from attacks people make on it in the media. Critically examine the functions of public relations and how Tesla can integrate it to anticipate any bad media backlash
Answers to above questions on Tesla Case Study
Answer 1: Personal selling is an important form of marketing strategy that many companies rely on heavily in order to promote their products and services. In the case of Tesla, Elon musk also makes use of this strategy and there is no money spent on advertisements. Elon musk makes use of his brand identity as a unique personal selling point and this is utilised in a number of ways. As for example, Elon is highly involved in Twitter in the form of sharing memes that bring the attention of people worldwide. In addition to this, by focusing more on innovation and quality of product, and organising its own event for new launches, Musk creates a sense of curiosity within its target audience, and it ultimately reduces any requirement for advertisement.
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