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Tesla’s Marketing Strategies: How The Company Becomes Successful

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By Sam Nguyen

CEO Avada Commerce

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The Covid-19 pandemic has forced many brands to rethink and adapt themselves to the new normal in order to survive. During this period, it is also beneficial to examine the strategies employed by other strong businesses. Tesla is one brand that I believe is worth researching and following. The electric car company is known for its innovative marketing strategies and for upending the automotive industry. In this article, I will share with you what strategies Tesla is implementing for its marketing, and why it has become so successful with them. Let’s jump right into the details!

Who is the Tesla company?

Let’s get started with some background details. Tesla is a California-based automaker best known for its electric vehicles, lithium-ion batteries for energy storage, and residential solar panels. Nikola Tesla, the electrical engineer and physicist best known for inventing the induction motor, alternating current power transfer, and other ground-breaking concepts, inspired the company’s name. The infamous Elon Musk has been the CEO of the company for more than a decade, as well as one of the driving forces that has turned a humble car company in early 200s into the most valuable automaker in the world.

Why has Tesla been so successful?

In such a competitive market with high barriers to entry like the car industry, not to mention there are many giants such as GM and Toyota, how come Tesla has made it to the top?

Tesla never simply follows a trend

Musk talked about success and how to build a solid business concept during a graduation speech at USC. Musk made it clear during this speech that progress does not come from following a trend. “Rather than reasoning by analogy, you start with the most fundamental truths you can imagine and work your way up from there. This is a simple way to determine if anything makes sense or whether it is just what everybody else is doing. It takes a lot of time, but it is the best way to think, particularly when creating something new,” he explained.

Compromise was never an option

Musk also discussed the purpose of a Tesla and the company’s overall goals in a blog post. The team aimed to create “an electric car without compromises,” which is why the Tesla Roadster is built to outperform a gasoline sports car such as a Porsche or Ferrari in a head-to-head comparison. Aside from that, it has double the energy efficiency of a Prius.” Compromise was never an option for Musk and his team; it was either build a fast, attractive, reliable, and desirable electric car or nothing at all.

It hires like-minded people

Musk said during his talk at USC about his experience building a team, If you are building a company or if you are joining a company, the most important thing is to hire great people. An organization is simply a community of wonderful people who have come together to produce a product or service. And the success of the organization will be measured by how talented or hardworking the community is, as well as how cohesively they are oriented in the same direction. So, do everything in your power to attract great people.

Peter Thiel, co-founder of PayPal with Musk wrote in his book Zero to One, “Tesla’s CEO is the combination of an engineer and a salesman, so it is not surprising that he has assembled a team that’s very good at both.” Additionally, Tesla’s vice president of OEM & Re-Manufacturing characterized working for Musk as both challenging and motivating. “Elon is a very inspiring individual who will push you to your limits. He will ask you the unthinkable and will not be satisfied with poor results.”

Its cars are sustainable and sexy

Tesla recognized early on that fashion drove interest in clean technology. It became a status symbol to drive a less-than-sexy Prius or Honda Insight in order to appear ‘green.’ Those cars only made drivers look cool because they were owned by popular eco-conscious movie stars, so Tesla decided to create cars that can make drivers look cool. As a result, Leonardo DiCaprio replaced his Prius for an expensive (and gorgeous-looking) Tesla Roadster.

The Model S is a beautiful and attractive car that draws a lot of attention when seen on the street or in a parking lot. Aesthetics are important in consumer electronics, fashion, or automotive, and Tesla understands this. Where other electric vehicle manufacturers have fallen short, Tesla has excelled.

Technology is the number one priority

Tesla’s technology is so strong that it is even used by other automotive companies: Daimler uses Tesla’s battery packs; Mercedes-Benz uses a Tesla powertrain; and Toyota uses a Tesla engine. General Motors has also formed a task force to keep an eye on Tesla’s next moves. When it comes to R&D, technology, and creativity, the company is so far ahead of the competition that it’s difficult to even discuss them in the same breath. Tesla has always prioritized product creation and technical innovation. It has whole teams devoted to R&D and spends on a daily basis to stay at the top of its game.

It handles its own supply chain

When asked about Tesla’s distribution, Thiel said, “Most companies underestimate distribution, but Tesla took it so seriously that it decided to own its entire distribution chain.” Tesla owns all of its service centers and stores and does not rely on dealers. Thiel doesn’t deny that Tesla’s up-front costs are higher than those of other automakers due to a shift in business model that includes no dealership network, but that provides control over the customer experience, strengthens Tesla’s brand, and saves the company money in the long run. Tesla is also working on rising capacity for its Gigafactory, which will allow it to sell cars at a much higher volume than it does now.

Tesla’s Marketing Strategies

Arriving at the right time

Tesla was created at an important juncture in history. When GM recalled its electric cars in 2003 and many other automakers were abandoning their electric car programs, Elon Musk took a huge risk and founded Tesla because he wanted to make electric car adoption a success.

The risk was heightened because Elon financed a substantial portion of Tesla out of his own pocket. Elon saw an opening when there was a sudden void in the market and a chance for a new entrant. Timing is key in entrepreneurship, according to Jason DeMers in Entrepreneur Europe. It is important to launch a business at the right moment.

Offering a complimentary product set

Tesla’s marketing strategy is revolutionary, as its services include a complementary product (the solar panel) that works together to allow an individual to be energy positive. This combination allows the company to earn more money from the same customers. The more goods a consumer purchases from a given business, the more difficult it is to go and find someone else.

Owning the value chain

As mentioned above, Tesla does not use a conventional car dealership distribution model, instead owning the supply chain from its own showrooms. Place is one in the important four P’s of marketing. Tesla is using the location of its sales to gain control of its distribution channel and to build a stronger brand (customers will not be confused by other car brands on the forecourt).

Starting lean

Tesla’s first vehicle was a high-end luxury car targeted at a specialized market. It was aimed at the limited number of rich people who could afford a sports car and who are caring about the environment. Small is beautiful, and as Eric Reis says in Lean Startup, starting lean allows you to see if you can make things work for a small number of people before wasting your time and resources trying to sell something unwanted to a large number of people.

Identifying the early adopters

Elon realized that if he could get it right for this segment of the marketing life cycle, he would be able to move that success on to the early majority, for example, those who wanted an attractive electric car at an affordable price.

Focusing on the ‘P’ - Product in marketing

Unlike other automakers, which spend a lot of money on advertisements, Tesla put all of its money into research and development, engineering, and manufacturing. It focuses on a particular ‘p’ in marketing – Product – rather than the ‘P’ in promotion.

The aim was to create the best electric car (Roadster) that customers would suggest to others (a much cheaper form of marketing) and to concentrate on proof and track record rather than brand perception. What distinguishes Tesla is that it has a social mission at the core of its brand. Tesla was able to distinguish itself from BMWs and Audis.

The Roadster was not only a beautiful car, but its success as an electric vehicle outperformed all those that came before it. In a head-to-head comparison, the Tesla Roadster was planned to defeat a petrol sports car such as a Porsche or Ferrari. It can accelerate from 0 to 60 mph in 1.9 seconds and has a maximum speed of more than 250 mph. Aside from that, it has double the energy efficiency of a Prius. The Roadster was also the first electric vehicle with a range of 200 miles on a single charge.

Focusing on getting reviews and word-of-mouth referrals

The strategy of relying on positive feedback has paid off, as there are now several online groups and discussion forums dedicated to evangelizing for Tesla. People in such groups are motivated by the company’s social mission and believe they are making a difference in the world, so they don’t just like the brand; they are passionate about it.

Tesla was able to channel earnings from the premium Roadstar, which was a rather expensive car, into the creation of a more affordable car for a wider market after releasing the premium Roadstar, which was a rather expensive car. This was shipped for about half the cost of the Roadstar.

Use Multiple Channels For Brand Exposure

Taking advantage of multiple public relations opportunities is a natural and smooth way to spread the word about your company. Although Tesla’s social media platforms and website raise brand awareness, the company has also received attention for collaborating with colleges to deliver its START program. The 12-week training program prepares students to work in the electric vehicle manufacturing industry.

PR promotions can be extremely successful at highlighting the brand’s priorities and mission, as well as gaining community support. While social media is probably a given, online video visibility on platforms other than YouTube (Vimeo, Facebook, Instagram, and the fast-growing TikTok are the most well-known examples) can be a valuable addition to your digital marketing arsenal.

Stand With Your Competitors

Musk made all of Tesla’s patents open-source, allowing anybody, anywhere to access them. He is also considered to be supportive of the brand’s rivals as they show success in the area of electric vehicles. Healthy competition can be associated with creativity and providing customers with more choices.

Have A Social, Charismatic CEO

The name “Tesla” conjures up memories of not only a sleek, aerodynamic electric sports car, but also of its charismatic CEO. Musk has been a driving force in the brand’s growth. Tesla upended the car industry, and Musk did the same with CEO action. Most CEOs are conservative, but Musk is not one of them. Though his social media activity has been contentious at times, it has ultimately acted as an important strategy of promoting Tesla. CEOs that are involved on social media, socially conscious, and charismatic can have a huge impact on brand awareness.

Stay Consistent With Your Brand’s Mission

Although Tesla obviously wants to sell cars, the company is also committed to leading the world in the imperative transition to electric vehicles and renewable energy. This topic seems to resonate with the brand’s audience and is repeated often. To help you achieve your objectives, make your purpose and vision clear and communicate them often.

Final words

Observing and learning from effective marketing strategies of other brands, such as Tesla, can be critical in helping you see the bigger picture and create your own winning digital marketing strategy during difficult times. I hope this article has provided you with valuable information about Tesla’s marketing strategies. Please feel free to leave comments below for further discussion on this topic!

Sam Nguyen is the CEO and founder of Avada Commerce, an e-commerce solution provider headquartered in Singapore. He is an expert on the Shopify e-commerce platform for online stores and retail point-of-sale systems. Sam loves talking about e-commerce and he aims to help over a million online businesses grow and thrive.