Tesla Motors

Mohamed Al Mutawaa (1312024284)

Bamdad Kolbadi (0704012744)

Norah Al Nimer (1307023925)

Ahmed El Gendy (1311024263)

Dr. Valeria Freundt

Principles of Marketing Section-E

19/04/15

3,956words

“We pledge that this is our own work.”

Table of Contents

1. Executive summary……………………………….………...………………...…….3

2. Analysis of the Situation………………………….………...……………….……3-8

3. Situational Analysis……………...…….……………………….……………….8-12

4. Goals and objectives………………………….………...……………………….…13

5. Marketing strategies………………………….………......………………….…13-15

6. Financial Data and Projection………………………….………...…….………15-16

7. Organization design………………………….………...……………….….………16

8. Implementation Plan………………………….……..……………….……………16

9. Evaluation and control………………………….……..……………….….………16

10. References……………………….………...………………………….….………17

11. Appendix………………………….………...……………………..….….………18

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1. Executive summary

Tesla established themselves as one of the leaders in the Electric Vehicle Market and a leader in innovations. It is the first fully electric that was mass-produced and was exported to foreign markets. We have developed a plan to introduce tesla motors for the first time in Dubai and then expand it to the rest of UAE.Since the electric cars are not very popular in the UAE automotive market as a part of our short-term strategy we want to gain UAEs residence awareness and meanwhile start to sell our product.  Taking all the facts into consideration, our strategy is to firstly to gain the communities awareness and then in the long term gain market share and increase our profit.

After viewing our SWOT analysis and Porter’s Five Forces analysis we have identified our strengths and opportunities and have become aware of our weaknesses to improve them in the future. Since Tesla Motors Technology is a revolutionary in sustainable energy usage for transport and in same time Dubai government has developing a plan for reduce energy consumption and make a eco friendly city, we will have support of government to make it more effective their plan.

However, using such a new technology still is in developing phase and may have some failures in process, we can minimize such a errors by acting synchronized with manufacturer to fix the failures in cars whenever it happens. According to our research we will not have any serious competitor since we are opening a new category in UAE automotive market and we have government support.

2. Analysis of the Situation:

2.1 Analysis of the Companies Internal Environment

2.1.1 Objective:

Short term: Spread awareness across the UAE through

advertising and campaigns about the importance of electrical vehicles for

the future in order to increase market share. Our aim is to sell about 50

units the first year and then expand our sales to 300 cars next year and

also aim for selling 500 units annually, this is according to the history of

the US market.

Long term: Once we reached our goals in the Dubai market,

we later then expand our sales across the UAE. Meanwhile, we should

plan for establishing more than 100 supercharger stations in the country.

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2.1.2 Mission/Vision Statement:

Mission: Our main goal when we first created Tesla Motors is still the same as when we started a decade ago. Our purpose is to accelerate the start of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible. Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives.

Vision: Tesla Motors contributes to his H.H Sheikh Mohamed

Al Maktoum vision of developing the city into becoming

environmental friendly. This helps Tesla Motors reach its

vision of providing alternative mode transportation.

2.1.3 Corporate Goals:

All corporations should seek to increase their profitability level, if they want to remain in the business. Therefore, in order for our brand to remain in the market we should seek into developing and enhancing our products regularly. Increasing the range of products is essential because it will attract new customers. Whether it is through the development of new markets, our company needs to understand how to increase its profit both now and in the future to stay in the business and to achieve higher.

2.1.4 Human Resources:

Bamdad: Sales Manager

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Mohamed Al Mutawaa: Human Resource Manager

Ahmed: Accounting Manager

Norah: Marketing Manager

2.1.5 Age and Capacity of Equipment

Tesla Motors Agency in the UAE is a new business so this part does

not apply

2.1.6 Financial Resources:

Capital needed for:

Human resources

Equipment

Property

Legal Payments

Marketing

Exclusive Agency rights

Training

Capital will be raised by loans and selling stocks to

shareholders

2.1.7 Internal and External Polices

Internal polices

Eco friendly facility setup, color in white to reduce needs for

electricity

Using bikes in the facility to reduce emissions, avoid using AC

in winter to save electricity.

Offering car lift service to all employees to not drive personal

cars.

External polices

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Individual order using just in time method (no stocks) to avoid

any overflow of stock.

Maintenance pick up service for costumers to be more

convenient

Paying “dirham per minute” to costumers for every minute that

company service is delayed. After 2 hours in regular

maintenance.

2.2 Market Analysis:

2.2.1 Characteristics of target market:

Geography: Our aim is to start in Dubai and try to sell

as much cars as we can and target as much people as

possible by convincing them of how suitable and

practical it is and later to expand our business across the

UAE once it becomes a success.

Demographic: since we are launching a luxurious car

with comfortable features our customers will most

likely be males with an annual income that exceeds

300,000 DHS, according to the US market.

Psychographics: since Dubai is developing into

becoming an environmental friendly city, people

targeted are the ones who are ethical and care for the

environment.

Income: This car suits different types of people, for

examples, we have vehicles that suit families and we

also have cars that are suitable for male drivers who

enjoy sports cars and driving fast. Therefore, our cars

run from medium income to high income depending on

the buyer’s situation.

Motivation/Expectation: in correspond to H.H Sheik

Mohammed’s vision, this car will be made for

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environmental friendly usages and to reduce the coast

spent on gas.

Age: our goal is to target everyone and all ages, but our

main buyers would be male individuals that range from

30-60, as they are the ones who have a higher

purchasing power.

2.2.2 Participants Involved in Buying Decisions:

Kids, mothers, young adults, friends, car bloggers

Influencers Buyers

Car bloggers - will influence

young adults by talking about

car speed and the car

technology and style

Young adults

Kids – will influence mothers

by the safety and entertainment

features in the car which would

make the mother interested

Mothers

Environment – as the car is eco

friendly green activists in the

UAE will persuaded to buy the

car

Green activists

2.2.3 Market Needs:

The need of an fully electric car in the market

No need to wait in line to get fuel (Time saving for

business people)

Saves money (no need for fuel)

Quiet car (no noise pollution)

Highly safe car

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2.2.4 How new offers meet those needs:

Service package – efficient service (car is easy to

service, takes max 2 hours and 3 hours with the pick up

and drop off)

Warranty saves money to the customer if there is any

factory faults

With the premium service customer will receive another

tesla s model at the time of the service

The battery capacity is largest in its range

Tesla s model has a high safety ranking as it dose not

have a fuel tank, therefor the car will not explode in a

major collision.

2.3 External Environment Analysis:

2.3.1 Competition:

Audi, Porsche, Lexus, Mercedes (SLS E-cell) and

BMW (I-8) (Luxury and Hybrid cars)

Tesla has fewer parts that mean there are fewer

technical malfunctions, as the car has no motor VS its

rivals.

Tesla has a higher mileage range

Fully customized not like other competitors

Maximum 2 hour maintenance unlike other rivals

Most of the competitors are hybrids (run on petrol and

electricity) by our car is full electrical making it

2.3.2 Political/ Legal / Regulatory:

Middle East specs required

Safety requirements

2.3.3 Economical/ Demographics:

Good GDP, Stable

High employment rate

Nationalization

Low inflation rate

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2.3.4 Social and Cultural:

Four door cars are preferable in the UAE. As drive Arabia

stated “Factors taken into account include price and overall value,

ride quality and comfort, build quality and materials, engine

characteristics, on-road handling ability” and the top cars for

2014 all were 4 door family vehicles.

2.3.5 Technological:

Advanced software’s

Electrical engineering

More than 1,000 patens on intellectual ideas

2.3.6 Environmental:

Efficient, does not use fuel

Uses electricity

3. Situational Analysis – SWOT and Porters five forces analysis:

3.1/3.2 SWOT Analysis

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3.3 SWOT Matrix

Tesla Motors Internal Position

Strengths:

Tesla Motors is one of the most technological advanced car companies in the

market. With this technology they were able to create an ultimate driving machine

where they focused on being energy-efficient as well as having a fast car to compete

with super cars. Tesla Motors has great intellectual assets within the company. That

helped invent state of art electric transmissions and drive trains. Tesla Motors was

also able to make their production platform a multipurpose platform so that it can be

used for their future crossover model and any other model they plan to make. One of

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Strengths:

Energy efficient product

Strong technological expertise

Their current platform developed

for Model S has the ability to be

used for their future crossover

model or any other model they

envision

Strategic partnerships

Weaknesses:

New product, could have faults

Battery, distance problems

Not wide variety of products

Price is higher than other luxury

combustion engine powered

vehicles.

Opportunities:

First electric vehicle agency

Matches Sheikh Mohamed’s

vision

Economic welfare is stable

Only company specialized in

fixing Tesla cars.

The social norms in the UAE

Threats:

Competitors

New in the market

No brand loyalty

Never tested in the Gulf

Tesla’s important strengths is their strategic partnership as a strong supplier for

Toyota. This gives Tesla Motors an advantage over competitors as Toyota is one of

the strongest car companies in the current industry and Tesla Motors can gain more

experience from Toyota. The cost of maintaining a Tesla Motor is very cheap because

of the use of advanced technology. It costs an average of 600 dollars a year to

maintain one car.

Weaknesses:

Tesla Motors is still new in the car business. There may be some faults with

their product. One of the greatest concerns and weaknesses is that the battery used in

the car might not be able to cover long distance travels. This could limit Tesla Motors

market share, as people that would want to go for long road trips would not be

attracted to this product. Currently Tesla Motors only has a few products to choose

from. This could also be strength as customers will not be confused with so many

choices when trying to purchase a Tesla. However we consider this a weakness as

having more products gives Tesla Motors a greater potential of increasing its market

share. Lastly Tesla Motors price range is higher than other luxury combustion engine

powered vehicles. This will make a customer think again about buying a Tesla and if

it is worth the price.

Tesla Motors External Position

Opportunities:

With the world developing at a great rate there are many opportunities

emerging. Tesla Motors has a great opportunity to attract customers interested in

Electric Vehicles within the UAE, as Tesla Motors will be the first EV company to

open an agency in the UAE. This gives Tesla an advantage to penetrate this market

before other competitors. Dubai is one of the fastest growing cities in the world and

with this growth they are under pressure of being environmental friendly. Recently

H.H. Sheikh Mohamed Al Maktoum has set a vision of making Dubai a more Eco-

friendly City. This gives Tesla Motors one of their greatest opportunities as they will

support the leaders vision and there are possibilities of having the governments

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support with this project. They may help reduce our costs by lowering the legal

payments or also helping advertise and encouraging Dubai citizens to invest in a

Tesla. The economic welfare of the UAE is stable. This is another opportunity for

Tesla Motors as customers can afford to buy a Tesla car. Any normal garage cannot

service Tesla Motor vehicles. Because they use specialized computers to check the

cars system, this is beneficial for Tesla Motors, as their customers will have to come

service their vehicles with us. Lastly from studying the social norms in the UAE we

found that people are attracted to new and unique products. With Tesla Motors being

a new and unique product in the UAE we are expecting many people to be attracted to

the futuristic electric vehicle.

Threats:

Although Tesla Motors has many opportunities there are a couple of threats

that must be accounted for as well. With Tesla Motors opening a new agency in the

UAE there will be a lack of experience regarding the market. Tesla Motors will also

have a low market share because it is new in the UAE. This may affect the

companies’ revenue at the development stage. Tesla Motors has low or no brand

loyalty in the UAE as it is a new product and not many people have experienced the

product. This will make it difficult to attract new customers, however by focusing on

advertisements this problem can be resolved. One of the greatest threats that many car

companies have in the Middle East is the high temperature in the summer season.

Based on historic events many cars have either caught fire or had mechanical failures

due to the heat. Tesla Motors vehicles have been tested in Texas under extreme hot

conditions. However the climate may differ in the Middle East, which may cause a

small risk of mechanical failures or even batteries exploding which can be really

dangerous. Lastly companies in the UAE that have a great market share might react to

Tesla Motors sales of Electric vehicles in the UAE. Car companies such as Toyota

have well-developed vehicles such as Toyota Rav4 Hybrid and Prius. Also Chevrolet

has the Volt 2 and Honda has the Civic Hybrid and the Smart car. All these vehicles

are in the same category as Tesla Motors. Tesla Motors is able to differentiate itself

from all these vehicles by being more luxurious and sporty. However this brings in

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more competition from the luxurious and sporty cars such as Mercedes-Benz, BMW,

Porsche and much more.

3.4. Porter´s Five Forces

Supplier Power: We receive the supplies directly from Tesla Motors in the US, so there isn’t any supplier power. (Battery, Engine, Chassis/Engineering, Transmission)

Buyer Power: Very low bargaining power as Tesla Motors is the only producer in this segment.

Competitive Rivalry: High competition between major brands. However there is no other EV in that sector.

Threat of Substitution: Low threat in the EV sector, however high threat with luxury class vehicles.

Threat of New Entry: Small number of competing vehicles, different niches. Also since fuel is cheap in the Middle East not that many EV companies are willing to take the risk to branch our in the Middle East.

3.5. Establishment of a strategic focus

After looking at Tesla Motors SWOT and Porter’s Five Forces analysis we were able to identify the companies strengths and opportunities as well as the weaknesses and threats.

One of the main strengths in Tesla Motors is the advanced technology used. Tesla Motors must focus on maintaining this advantage over customers by investing in intellectual assests. Tesla Motors main opportunity is H.H. Sheikh Mohamed al Maktoum vision of having an eco-friendly city. If Tesla Motors takes advantage of this opportunity there are possibilities of increasing the number of sales drastically if the products are advertised strategically.

Although Tesla Motors has great strengths and opportunities there are some weaknesses and threats that must be focused, and finding a solution for these problems are essential to keep the business ahead of the competition. One of the main weaknesses of opening Tesla Motors in the UAE is having low experience and market share. Having low experience may slow down the business and may also be costly, because Tesla Motors would have to pay for the mistakes that are made. In order to solve this problem it is important to hire employees that have great expertise in the car industry in the UAE. This will help reduce mistakes and guide the company to increase their market share. Finally Tesla Motors will face a great threat regarding the scorching temperatures in the summer. The high temperatures may affect the cars mechanics; it could lead to a mechanical failure or explosion of the batteries. Tesla Motors must test the cars more heavily during summer in order to ensure the safety of their customers.

4. Goals and objectives

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4.1. Marketing objectives: Top of mind, awareness. We want to reach top of mind and being known in the market by the customers. We will easily reach this as we are the only fully electric car in the UAE market so its

4.2. Product objectives: Ensure that the product is usable in the UAE by providing supercharger stations. Also another objective is to ensure an eco-friendly environment by the usage of electric powered vehicle.

4.3. Financial objectives : Attract more investors and maximize shareholder profit by increasing revenue and reducing cost.

5. Marketing strategies

5.1. Marketing Mix actions

5.1.1 Product mix

5.1.1.1 Product

As a new category in the market our brand name is not well know for the local communities, but an advantage that we have as the UAE is a globalized county, and a lot of people know the brand name from other countries such as Europe and the US.

Tesla’s brand image is being eco friendly and being innovative and futuristic.

There is no brand equity, as the brand is not known in Dubai.

5.1.1.2. Price

Since product is its introduction cycle we plan to use price-skimming strategy as it has technological advancement.

Tesla motors price policy is to set price (includes agency profit) by factory. So, we will sell cars base on Tesla motors suggested price adding handling and shipping costs. This make our price strategy Cost-Oriented with markup approach.

Highly valued, as it is only fully electric car in UAE so car price is slightly high which place it in premium Price category.

Offering financial allowances such as no interest on installments or zero down payment requirements in introductory stage.

Price for each order is dependent on the options that the costumer customized, which regards. For example extra option of having 2 additional reverse seats or different rims spokes or higher quality of interior leather.

This is a luxury car and because of its origin it is inelastic.

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5.1.1.3. Promotion

Gaining market awareness and educate people about fully electrical car and benefit of it.

Because Tesla will be the first electric car in the UAE, we have the objective of being the top of mind on electric vehicles in the country. Therefore, the marcom campaign will address not just the target but the whole population. Advertising: it is sedan car we try to reach all society because some are the influencer and other group are buyers. So for awareness we need to reach all market. TV ads, prints, banners, advertising stands in malls to show actual car and give flayers including information about car benefits and options to promote. Sponsorship of events. For newspaper, daily bases for two months. For specific magazines, one page in each period for 3 months. TV ads, for two weeks daily bases. Social media, YouTube and Facebook as they apply.

Publicity and PR: stating our commitment to H.H.R. Mohammed Bin Rashid Al Maktoum vision. Also, sponsoring Green (ecofriendly) activity related events.

Sales Promotion: offering free service contract for the first 100,000 KM for unlimited time for the first three months as a opening offer.

Personal Selling: both in advertising stands and in showrooms, our sales persons will assist visitors.

We’ll develop an Arabic version of the tesla motors website that will suit Arabs.

5.1.1.4. Place/Distribution

We will start with one shop in Dubai and long-term plan is to spread across the UAE.

Our first showroom and service center will be located in sheikh Zayed road as it has all the main dealerships in Dubai.

Distribution channel is directly as we are direct agents of the producer.

The cars will be directly shipped by tesla from the US to Dubai port. After custom clearance, carriers will derive cars to the facility.

No electronic distribution as we are not going to sell the cars online

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5.1.2 Service Mix

5.1.2.1 People

We will get professional employees from Tesla Motors US in order to train the employees in the UAE.

5.1.2.2 Process

The car service will take less than two hours. The car will also be picked up and delivered to customer’s location less than three hours.

5.1.2.3 Physical Evidence

As you enter the showroom of Tesla Motors a receptionist that will guide you around and show you the different products available will greet you. We also have premium service where we offer the customers a replacement car while their car is being serviced.

6. Financial Data and Projection

In US:

2013, 21,000 Model S Units sold 2014, 40,000 Model S Units sold 2016, 100,000 Model S projected to sell

Costs:

Cost Per Unit - 187,000 AED

Shipping Per Unit – 10,000 AED

Customs Per Unit – 5,000 AED

Price Per Unit – 260,000 AED

Tesla Motors has a market share of 0.006171% of the Auto Manufacturer sales in 2012 US

Our projected market share in the UAE for EV is 100% as we are the only

electric vehicles distributor in the UAE. Our projected market share of cars is

0.01%, which is higher than the US market share, because the social norms in

the UAE can influence customers purchase preferences, and people like to buy

new and unique products.

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Number of Cars sold in the UAE:

2011 – 183,750 Units 2012 – 245,000 Units 2013 – 370,000 Units 2014 – 452,500 Units 2015 – 545,625 Units projected

US Car sales:

2012 6,000 Units 2013 33,000 Units 2014 53,000 Units 2015 77,667 Units Projected 2016 101,167 units Projected 2017 124,667 units projected

Our projected car sales for 2015:

Realist 55 units. Pessimist 30 units Optimist 80 units

Our projected car sales for 2016:

Realist 303 units Pessimist 165 Optimist 440

Our projected car sales for 2017:

Realist 486 Pessimist 165 Optimist 707

7. Organization design

Our company runs in a centralized structure where top managers make all the decisions (in the appendix)

8. Implementation Plan

In Appendix

9. Evaluation and control

In the first year the company will operate at a net loss. However in the second year Tesla Motors will be receiving net income. In order to control these aspects we will aim to sustain our market share and try and increase it over the following years. As our objective is to sell 55 cars in the first year, we have a projected number of sale for the upcoming years and we can compare with our actual annual sales to understand and evaluate our current situation regarding market share.to calculate the market share

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we are going to compare our sales with the total of cars that were sold in the UAE and then compare the past years with the current year to view the percentage increase in market share.

Also by surveying our customers to see if the product has met their satisfaction and expectation. At the same time we are going to do an annual public survey to the brands awareness power and top of mind, which helps us to evaluate our marketing strategies.

10. References

http://www.slideshare.net/joseangeldf/darden-school-of-business-tesla-strategic-analysis

http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html

http://www.teslamotors.com/blog/mission-tesla

http://insideevs.com/tesla-production-projected-to-be-100000-units-in-2016/

http://www.thenational.ae/business/industry-insights/retail/uae-car-sales-leave-others-behind

http://www.myteslablog.com/2014/10/tesla-buyers-demographics.html

11. Appendix

Competitor analysis

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Buyer profile in US market

Sales

projection bases on US market history

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Orginazational structure

Managing Director

Marketing manager Sales manager PR manager HR manager Service

manager Finance

manager

Managing Director Asistant

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Preceptual map

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Projected sales

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estimated income statement 2016

Estimated income statement 2017

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Estimated Income statement 2018

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Implementation plan

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