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Macro and Micro factors of automobile industry

Discuss about the Tesla International Marketing for Roadster Battery System.

It is observed that the global automotive industry has been booming with success thus exhibiting great development and profitability. Further the aspect of non uniformity can be speculated in the global market. However the officials related to the automobile industry seem hopeful regarding the US market, especially about the North American market. The market researchers have estimated that the sales in the North American region are likely to rise from 13 million cars to 16 million cars within 2018. The auto sector of India is booming along with its fastest growing economy. Tesla Motors is a 13 year old American multinational company that excels in selling electric cars and other related car parts. This report will shed light on Tesla’s products and the market that the company can penetrate thereby assessing the company’s business scenarios and strategies (Eberhard & Tarpenning, 2006).

Thus with the increase in the number of automobiles, the want for the consumption of oil is also magnifying. Thus the new concept of the electric cars is filling up the space.

The main macro factors behind the electric car industry are as follows:

Due to the high consumption of oil and petroleum, the electric cars are notably being brought to existence

As a result of manufacturing more electric cars, the electric car market will in turn be creating more jobs and a job market

The electric automotive sector is estimated to upgrade the living standards of the humans connected

The introduction of the electric cars in the market will certainly minimize the usage of foreign oil and thus its demand (Motors, 2011)

For example, out of the total oil consumption in US, it is witnessed that around 70 % of the oil is utilized for transportation purposes. Further the passenger cars are creating the 70 % of oil consumption in the US. Again on the other hand, nations like India and china are also demanding more and more oil to the rising demand in their middle class segment of the society. Thus this may lead to the usage of almost 1.5 billion automobiles on the surface of the globe within 2050 which used to be 750 million during 2010. Hence, this sort of scenario calls for the manufacturing of electric cars and the advent of new and updated technologies (Motors, 2015).

Nonetheless, the introduction of the electric automobiles in the global market will certainly create new job vacancies for the global population. This is because the new drive to updated technologies and its innovativeness will genuinely demand more and more workers which will in turn create jobs. Thus the manufacturing sectors, the technology segment, the research and development sector and others will require human resources that are to create job vacancies for the global population (Rohter, 2008).

Physical evidence

In order to switch on to new and upgraded technologies and the usage of electric automobiles the communities and societies at large must be well harnessed and equipped with knowledge to deal and drive with it. Thus it requires qualified and well informative persons to handle or buy the electric vehicles. Further the oil consumption will be minimized which again can be demonstrated as another form of living a better, healthy and quality life. It is further speculated that most of the countries have to buy oil and export it which displays the country’s money goes outside. Therefore the inception of electric automobiles can be instrumental in bringing down the level of money spent on foreign oil opined Martins et al. (2015).

Added to this, there are certain micro factors that are affecting the inception of electric vehicles. It is speculated that the persons pertaining to the age group of 45 to 55 years are exhibiting interest to buy the electric cars. However, the cost and pricing of the electric automobiles are making them sceptical in taking decisions. However the consumers living in the urbanized zone have expressed awesome interest while it comes to buying the electric cars. There is also an assumption regarding the electric automobiles that sticks around the common buyers that these automobiles render less mileage and is favourable to run on small trips (Karamitsios, 2013).  

The physical evidence refers to the physical stores in this scenario. Tesla operates certain interactive stations along with its physical stores. The stores are located in the busiest places in US, Europe and Asia. The interactive stations introduced at the stores attract the consumers with their hi-tech and digitalized versions thus displaying the features and characteristics of the car (Rohter, 2008).

The criteria for entering the market has been its innovative green vehicle and selling of the car components. Another criterion for entering the market has been the company’s plan to target the niche and affluent class of the global society who are more informed and aware regarding the environmental hazards. The master stroke of the company appears pretty innovative. Moreover the company makes electric cars without compromising anything.

Toyota was into a joint venture with Tesla and invested $ 50 million to bring out its products that has Tesla’s green motor components. However, the joint venture does not exist now. It also got into ventures with Mercedes Benz A Class thereby manufacturing 500 automobiles only (Motors, 2011).

Criteria for entry

Piggyback marketing refers to less cost entry in the market. Tesla’s automobiles are very costly and thus it gets governmental subsidies. Moreover it also sought joint ventures to entry different markets.

Tesla is a starter in manufacturing the electric vehicle thereby boasting its car components. However, the business enterprise started in 2003 and operates in selective locations of Asia, Europe and US. It is still looking forward to get its licenses for other nations like India, Singapore, Michigan, and North Carolina and so on (Luthra et al. 2011).

Tesla went into contract with few companies such as Toyota who invested $ 50 million. It also went into contract with Dailmer and Mercedes Benz. Presently it is noted that the company might enter into contract with the LG to put LG displays on its Sedan products (Martins et al. 2015).

Tesla has been found to export its Model S car in several destinations like Netherlands, China, Hong Kong, Belgium and so on in the year 2014.

Tesla inputs an innovative strategy for its entry mode. The innovative strategy is its manufacturing of green cars. Moreover it gets government subsidies for its green products. It uses international strategic alliance to entry any new market (Rohter, 2008).

The apt choice of the country on the basis of 12Cs is India as all the situations pertaining to the 12 elements seem favourable.

Tesla’s barriers to entry are its high pricing strategy and its cost to manufacture green cars. Nonetheless, it receives subsidies for its production (Klepper, 2007)

In order to analyze the internal business aspects of any prevailing organization, a SWOT analysis can be performed which will assess the internal environment of the company as well as determine its strengths, weaknesses, opportunities and threats. Tesla Motors is a multinational American company that produces as well as designs high end automobiles including electric cars (Mangram, 2012). The SWOT analysis of Tesla is as follows:

The best characteristics that Tesla electric cars possess are its energy efficient feature. It is observed that the automobile make use of the renewable energy like solar energy. Strength of the company is that it is a much acknowledged supplier for motor parts to other companies. For example, Toyota is one of its customers who buy the machinery parts from Tesla. Moreover the company shares an excellent rapport with several steady investors such as the Google, Panasonic, Daimler as well as the Toyota Motors (Hafner & Tomlin, 2006).

Joint Venture

The car company is seen to come up with a new model which has been termed as the model X but has been acknowledged to be pretty expensive. This has been one of the reasons to drive away the consumers from buying it. Another aspect of its weakness is that the company takes lot of time to deliver the desired product towards its targeted consumers. This is because of its limited production capability. Another scenario that can be counted as its weakness is that the business enterprise holds an enormous debt of around $ 455 million which is shown as negative cash flow in its financial statement thus making the position of the business enterprise quite vulnerable. Tesla does not possess too much experience in the global market while compared to its competitors such as General Motors, Toyota and others (Rohter, 2008).

However when it comes to opportunities the business enterprise surely have great opportunities in the market due to its advanced usage of technology and manufacturing of the electric automobiles. Another point is that the global community is seemed to become more conscious about the environmental hazards and the problems that the fuel automobiles create. This will create a different revolution all together for the demand of electric cars in the global market. Again on the contrary it is noted that various nations like US provides subsidies for the manufacturing and selling of electric automobiles in the market (Martins et al. 2015).

One of the threats that can be counted while viewing the company’s scenario is that the models and the electric automobiles of the business enterprise are too expensive to be afforded by the common mass of the global society. Another threat is that the company gets from its competitors. Moreover the number of competitors giving stiff competition to the business enterprise has also magnified considerably. For example Volkswagen is giving a stiff completion to the company Tesla (Klepper, 2007).

It has also been discussed earlier that the automotive industry corresponding to the global market is non uniform in nature. The notable shifts to be traced pertaining to the demand of the consumers, extended regulations and requirements in order to maintain the safety and the corresponding fuel economy relating to fuel as well as the magnified amount of data and information collected. The point that there is a certain shift in the demands generated from the consumers are driving the automotive companies to engineer new and updated technical products and cars so that they are able to cater in a batter way to the needs of the consumers. Here comes the aspect of product differentiation and that is the part that most of the companies are trying to implement and deliver to their targeted consumers. This calls for the inception for the electric cars in the market (Luthra et al. 2011).

Piggyback

There are certain strategies abiding by the CAFÉ (Corporate average fuel economy) coined by the US are found to be difficult and tight to follow while it comes to the OEM (original equipment manufacturers) and thus it increases their overall cost. This can be another reason to come up with the electric cars. Along with the advent of the technology, there are more data and information that can now be accumulated so that the buyers are able to get a good hand over comparing the prices, features and the technology offered by the car companies. Moreover the buyers are able to communicate with the other fellow consumers or the car users which certainly provide a good deal of knowledge before buying. Thus the bargaining power of the consumers relating to the automobile industry has increased (Bhaumick & Driffield, 2010).

There are quite a few booming automotive industry sectors like US, China, Europe and others. However the automotive industry of India is growing with a faster pace and so the economy of India.

Presently the Indian automotive sector and the market is considered to be one of the booming markets all over the globe and is the centre of attraction for the KPMG ventures. This is because the economy of India has also considerably possessed a strong and robust position in the world economy chapter. One of the significant reasons to this aspect is that the present Indian government, the NDA government is inviting lots of foreign proposals and promoting foreign direct investments. Presently the Indian government is adding a lot of initiatives to its automobile sector in order to promote the green vehicles and the green technology. The annual growth rate of the Indian automobile sector is estimated to be 19 %. Moreover the nation plans to manufacture 5 million more vehicles for its consumers towards the closing of the year 2016 (Motors, 2011).

 Undoubtedly, the 5 million figures will be transformed into 10 million cars manufactured at the end of 2020 which will certainly provide a great mileage to Tesla Motors to operate its business and earn certain amount of profit. Thus these are the favourable conditions that Tesla might enjoy if it explores the Indian market.

It is recommended that the business enterprise follows the foreign direct investment as India is encouraging it. India is witnessed to apply the “make in India move” through which many foreign companies are invited to invest money and resources thereby manufacturing and producing products in India and exporting to other nations from India. Nonetheless this strategy appears to be encouraging for the Tesla Motors as it can invest money and start its own manufacturing plant in India thereby creating jobs for many Indians (Rohter, 2008).

License

It is speculated that the transport minister of India, Nitin Gadkari is looking forward to Tesla’s investment thereby giving the privilege to the company for setting up its biggest plant within Asia. Well there are few brands that have introduced the electric cars or the hybrid cars in the Indian market. They are the Mahindra, Toyota, Maruti Suzuki, BMW and so on. Thus the Indian crowd is not absolutely unknown to the concept and the idea of running electric cars which acts as an added advantage for the company Tesla because it will not be the first driver of the concept (Luthra et al. 2011).

The marketing mix tool comprises of the 4 Ps that is the product, price, promotion and place.

Owing to the product variant, it is comprehended that the company must sell its electric cars in the Indian market as it does in other markets. Moreover the company might introduce the concept of free charging for its electric cars which might gain in more consumers thereby acting as an added value to the variant (Luthra et al. 2011).

When it comes to place, India seems to be the most appropriate country where the company can pinpoint the busiest and costliest places of India to run the show. For example, the places like Mumbai, Delhi, Bengaluru can be the favourable places to open the stores (Berdichevsky et al. 2006).

When its promotion is concerned the company can actually club with the Indian government to promote its business and its manufacturing plant in India. Moreover the company can endorse celebrity figures and do advertisements on its products (Bhaumik & Driffield, 2010).

The price that the company sets for its buyers need to be competitive which is at par with the other competitive brands. Moreover owing to its costly products, the company can target the niche segment of the Indian society like the political leaders, celebrities, sports persons and other Indian industrialists (Mangram, 2012).

Conclusion

Thus to conclude, it can be stated that India seems a favourable spot for the Tesla Motors to perform its venture. Owing to the fast growing Indian economy and its respective car market, Tesla like other automotive companies such as general Motors can also utilize the situation and earn good profits out of a good deal (Klepper, 2007).

Tesla Swot Analysis

Strengths

·         Electric cars possess energy efficiency characteristics

·         Well known supplier of motor parts

·         Manufactures green vehicles

·         Business collaboration with giant global players like Google, Toyota Motors, Daimler

Opportunities

·         Steady opportunities in the market for its advanced technology usage

·         Diverse countries give subsidies to green cars which opens up opportunities for the company

·         Magnified oil prices

·         People awareness regarding environmental scenario

Weakness

·         Green cars of the company are very expensive to buy

·         Still most of the countries do not use technologies that support the green cars

·         Tesla takes too much time to deliver its products

·         The company owes a debt of $ 455 million

Threats

·         The company facing threats from its competitors especially Volkswagen giving competition

·         The products are too costly

·         The middle class segment of the society are not able to afford its products

Brand Proposition

·         Provides innovative and new products such as the green vehicles. Uncompromised luxury vehicle dealer

Brand identity

·         Best quality and creative green vehicles Hyperbolic, luxury car brand

·         Possess robust brand recognition

Brand Strategy

·         Product differentiation strategy

·         Incorporates brandtech strategy that is constructing powerful brand with the innovative technology

Brand association

·         Creativity, first generation green vehicles founder, reliability, luxury and sophistication

Brand Development

·         Innovation

·         Manufacturing luxury green automobiles

·         Online promotions and viral marketing

Brand Personality

·         Sophisticated design

·         Manufacturer of electric vehicles

·         Youthfulness and sustainable

Brand Strength

·         Creation of multi-network model through online community

·         Creative and innovative ideas of marketing and public relations

·         Highly updated and innovative technology usage

·         Sophisticated car models

·         Sells green vehicles

Brand Positioning

·         High priced cars

·         Great quality of products

·         Tesla has acquired its 10th position among the top ten car brands of the globe

Product

Highly innovative products

Updated technologies used in manufacturing products

Green and thoroughly electric automobiles

Produces automobile parts and components

Price

Product price is too expensive

Promotion

Mainly online and viral marketing

Strong celebrity endorsements including Hollywood celebrities like Leonardo Dicaprio

Place

Tesla’s presence is found in North America, Europe and Asia

References

Berdichevsky, G., Kelty, K., Straubel, J. B., & Toomre, E. (2006). The tesla roadster battery system. Tesla Motors, 1(5).

Bhaumik, S. K., Driffield, N., & Pal, S. (2010). Does ownership structure of emerging-market firms affect their outward FDI? The case of the Indian automotive and pharmaceutical sectors. Journal of International Business Studies, 41(3), 437-450.

Birk, D. (2015). Evaluation of the Marketing Strategy of Tesla Motors Inc.

Bohnsack, R., Pinkse, J., & Kolk, A. (2014). Business models for sustainable technologies: Exploring business model evolution in the case of electric vehicles. Research Policy, 43(2), 284-300.

Eberhard, M., & Tarpenning, M. (2006). The 21 st Century Electric Car Tesla Motors. Tesla Motors.

Hafner, J. L., & Tomlin, J. A. (2006). U.S. Patent No. 7,013,205. Washington, DC: U.S. Patent and Trademark Office.

Karamitsios, A. (2013). Open innovation in EVs: A case study of Tesla Motors.

Klepper, S. (2007). Disagreements, spinoffs, and the evolution of Detroit as the capital of the US automobile industry. Management Science, 53(4), 616-631.

Kumar, A. (2013). Green Marketing: Review. Asian Journal of Research in Marketing, 2(4), 45.

Luthra, S., Kumar, V., Kumar, S., & Haleem, A. (2011). Barriers to implement green supply chain management in automobile industry using interpretive structural modeling technique: An Indian perspective. Journal of Industrial Engineering and Management, 4(2), 231-257.

Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.

Martins, L. L., Rindova, V. P., & Greenbaum, B. E. (2015). Unlocking the hidden value of concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship Journal, 9(1), 99-117.

Maugain, O. (2016). The ‘devicefication’of the car: Adding personal vehicles to the digital marketing mix. Applied Marketing Analytics, 2(1), 57-72.

Mohr, J. J., Sengupta, S., & Slater, S. F. (2009). Marketing of high-technology products and innovations. Pearson Prentice Hall.

Morrish, S. C., Miles, M. P., & Deacon, J. H. (2010). Entrepreneurial marketing: acknowledging the entrepreneur and customer-centric interrelationship. Journal of Strategic Marketing, 18(4), 303-316.

Motors, T. (2011). Roadster Features and Specifications. Tesla Motors.

Motors, T. (2015). About Tesla. About Tesla. Tesla Motors, 1.

Park, J., Rast, J., MacDoughall, T., Nitti, B., Sinton, D., Geissler, A., & Roseli, K. L. (2014). Marketing Plan for Tesla Motors’ Model S.

Rohter, L. (2008). Shipping costs start to crimp globalization. New York Times, 3.

Vukotić, S., Aničić, J., Zakić, N., & Petrović, Ž. (2015). The role of marketing and brand in banking. Journal of Process Management. New Technologies, 3(4), 76-83.

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