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Founded in 2003 in the United States, Tesla automaker Company has its headquarters in California State and engages in the business of electric motor vehicle manufacturing. Additionally, the company makes battery products and is driven by the goal of creating a healthy environment without pollution from car emissions. The initial Tesla production was the Tesla Roadster, a fully electric sport car that propelled the company to the limelight in the sport car segment. Over the years, the American company has gained recognition in the industry and won more customers after the production of more luxurious models dubbed Model X and Model S which are also electric vehicles. In 2015, the company recorded their best ever performance of the last 12 years of existence managing to sell 125,000 electric car units. In 2016, the company profile has gone up beating earlier established brands and made it to the top ten of the highest consumed car brands in the world. The firm has announced the launch of advanced and affordable Model 3 by 2017. This marketing plan will help Tesla Motors sell 18,000 units of model 3 in the Australian market in the year 2017 with a promotional budget of US $500 million.
The Automotive industry in Australia is among the top ranked in the contribution to the Australian economy growth by up to 5.7% (Australian Government Productivity Commission, 2014). The car manufacturing industry came to life in 1925, after an international car maker company; Ford Motors set up a manufacturing plant in Victoria state. In 1948, Holden launched unique Australian designs before industry receive another player in 1958; Toyota Australia. The three brands have been the most popular with the consumers in the industry with a variety of models (Asia Pasic Economic Cooperation, 2005). The industry has experienced high and low car sales interchangeably due to the growth and, become more competitive in 2008 forcing out manufactures such as Mitsubishi out of the market. Additionally, Ford announced it will exit the manufacturing sector in October 2016, while Toyota and Holden announced they will stop manufacturing vehicles in Australian in 2017.
In the past five years, the industry has experienced high demands of automobiles. The industry has realized a 1.5 % rise in revenue as a result of increased demand for small cars (IBISWorld, 2016). There has been a stiff price competition among the various players in the industry, and the reduction of import tariff has resulted in low-cost vehicles.
In every corner of the globe, political and national leaders have advocated for use of technology by manufacturers to reduce the impact of global warming. The automotive industry has been very fast to adopt technology to make electric vehicles and match up the global campaigns and have more sales. Moreover, Auto customers have displayed constant and rampant changes in taste and preferences forcing manufactures to creatively come with unique brands to attract the adventurous consumers. The Australian motor market has been flooded by a variety of brands and models; locally made and imported. However, no any particular motor brand exceeds a market share of 20% with only two brands surpassing a cut of 10% (IBIS World, 2016). Victoria, Queensland, and New South Wales regions formed the top three regions with the highest customer base.
In the past five years in Australia, the fuel prices have alarmingly shot up forcing people to choose the small and fuel efficient vehicles that are cheap (Deloitte, 2014). The industry customers have a great desire in a car with improved performance, safety, and stability and the control of emissions (Australian Automotive Aftermarket Association, 2013). New cars in the Australian market make the highest sales compared to used cars (Deloitte, 2014). The motor consumers focus more on variety, quality and performance propelling the manufacturers to fight to be unique in their brands and outdo each other.
Tesla Motor is a reputable American brand in the production of electric vehicles and embraced technology to save the environment. Tesla Model is a luxurious, affordable brand going for $ 35,000 with an acceleration of 0-60mph in 6 seconds capturing customers with a love for speed. The car is made with advanced technology in battery with a charge that goes to 360km for one charge (Tesla, 2016). The car has a space of 66 inches behind front seats that allow owners to adjust the seat to a flat level and could be able to sleep inside. The model has integrated tablet to help the driver in navigation.
The users of Model 3 will have to pay for supercharger networks across all station (Golson, 2016). The production of Model 3 will be done in phases and may force out the customers who miss out to go for other brands. The car is not much distinguished in design with other models and may fail to lure customer with a taste for different designs.
Tesla Model 3 is integrated with improved battery technology making it cheaper to use compared to fuel vehicles that demands extra money and pollutes the environment. The consumers in the Australian industry are adventurous and may quickly embrace the new model. Additionally, the customers may be frustrated by the exit of other manufactures and decide to vent their anger through adoption of a new brand.
The Model faces stiff competition from other brands due to import low cost. The fluctuating Australian Dollar may affect the price of the vehicle negatively as well as prevent the consumer from buying the car.
The General Motors Company has an improved electric motor that uses both fuel and batteries giving the owners the autonomy to select their preferred mode (General Motors, 2016). The Holden Volt presents competition to Tesla Model 3 due to the ability to travel for long hours as drivers will not need to halt at charging stations. Another brand, Toyota; Aurion Sportivo brand is popular and affordable but with a lesser speed than Tesla Model 3 and announced it will launch power hybrid vehicles in coming years (Toyota Motors, 2015). ). Ford Motors; Falcon XR splint is affordable and has an enticing model but lacks the technology used for Model 3 (Ford Motor Company of Australia Limited, 2013). Hence, the industry is very competitive and requires creative strategies to capture and maintain a market.
Due to the competitive nature of the Australian industry, most automaker companies have heavily invested in advertising to popularize their brands. In Australia, Toyota and Holden are the highest spenders in annual advertising fee with up to US $100 million. The two are followed closely by Ford Motor that set aside an annual advertising fee of up to US $80 million (Lynch & Hwarthon, 2015). The rise of social media popularity has driven the companies to take the advantage of free airtime in social networking sites such as Facebook to complement the highly expensive TV and Radio airtime. Most Companies have signed up partnership deals with media houses such as the ABC media to allow frequent adverts and bombard the consumers with variety of messages concerning the brands (Australia Communication Media Authority, 2016).
Since the inception the industry has grown tremendously allowing the entry of more players and killing the monopoly enjoyed by few auto sellers. Technology has paved way for new and unique productions forcing Automakers to scramble for the top position in sales (Thurlow & Glynn, 2013). The dominant Toyota secured the first position in 2015/2016 with 22313 units followed by Holden with 21422 units. The third position in the same financial year was scooped by Ford Motors with 20143 units. Hyundai brand sold 18 613 units positioning itself fourth while Nissan closed the top five positions with 17141 units (Federal Chamber of Automotive Industries, 2015). Hence, the make and the type of various models have influenced the sales of cars in Australia.
Industry Share in %
US$ 60-80 Million
US$ 50-80 Million
US$ 70- 80 Million
The company targets to capture a market for Model 3 within the age bracket of 20-40 years across gender and a monthly earning of more than US $3000. The firm adoption of technology has boosted it capabilities to manufacturer a model that cut across demographic lifestyle and varying financial muscles.
Tesla Motors brands are viewed as modern and classy, environmentally friendly and fuel efficient. Tesla Model 3 is a stylish and affordable brand that appeals to the adventurous nature of teens and young parents in Australia while saving the money meant for fuel (Branman, 2016). Model 3 is current and has incorporated technology to give enticing features and can capitalize on the cheap price to beat Ford and Toyota models. Holden car with a fuel and a charger option can lure customers, but its high price may deter them from buying it.
Tesla Motors aims to capitalize on the comfort, affordability, and speed of the new model 3 and instill a sense of affordable luxurious brand. Constant adverts and promotions of the car will elicit the desire to own the vehicle. Consumption of model 3 in Australia will translate to increased revenues for Tesla.
The battery-powered Model 3 is luxurious, stylish and one would go up to 360 km on a single charge. The car allows seat adjustment that one would sleep on. The brand has a high acceleration speed of 0-60mph (Tesla, 2016).The car saves fuel money and protects the environment from harmful emission.
Price and placement strategy
The car is affordable compared to other luxurious brands. The first few customers should be given free monthly charging package. The Model 3 dealers will strategically position themselves in all states. The dealers should decorate their premises with banners and put up screens with the features of the car to get the attention of passers-by.
Media and the Budget
Broadcast media is the most popular in Australia, with more than 80% of citizens owning either TV or radio (Australia Communication Media Authority, 2016). Some of the media are 24-hours stations such as ABC and SBC and Tesla motors will seek to partner with them to market Model 3 vehicle at a yearly fee of US$ 200 million. For radio, the company will set aside US$150 million and sign an advert deal with the two stations with high number of Australian audience; Tuggeranong and Canberra.
Tesla automaker will invest US $100 million with newspaper adverts in the year 2017. The Australia financial review will take US$ 60 million while the Australia will promote the brand in a deal of US $40 million. Moreover, the brand will sponsor sports activities and national events at US $ 50 million countrywide.
Tesla Motors should import Model 3 in the Australian market and take advantage of the import tariffs in the country. The company should spend an annual promotional budget of US $500 million to popularize the brand and beat the competition. The Firm should launch brand dealers across all states and give rewards to first few buyers. The company should in future, start a manufacturing plant as all the manufacturers are exiting the market.
Asia Pasic Economic Cooperation (2005, December 29). Automotive profile – Australia.
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Australian Automotive Aftermarket Association (2013, June 18). Submission to Consultation
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Australia Communication media Authority (2016, Jan 18). Regulating Media and
communication. Retrieved September 10, 2016, from https://www.acma.gov.au/theACMA/regulating-media-communications-acma
Australian Government Productivity Commission. (2014, March 31). Australia’s Automotive
manufacturing Industry. Retrieved September 10, 2016 from https://www.pc.gov.au/inquiries/completed/automotive/report/automotive
Branman, M. (2016, August 31). Camper Mode will cozy up the interior of your Tesla Model 3. Digital Trends. Retrieved from https://www.digitaltrends.com/cars/tesla-model-3-performance-specs-news-rumors/
Deloitte, Inc. (2014, November 13). Global Automotive Consumer Study: Exploring Consumers
Preferences in key market Around the World. Retrieved, September 10, 2016, from https://www2.deloitte.com/content/dam/Deloitte/au/Documents/manufacturing/deloitte-au-mfg-2014-global-automotive-consumer-study-changing-nature-mobility-290914
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General Motors, Inc. (2016, April 21). GM Reports First-Quarter Net Income of $2.0 Billion.
Retrieved September 9, 2016 from https://www.gm.com/investors/earnings-releases.html
Golson, J. (2016, March 31). Tesla Model 3 announced: release set for 2017, price starts at $35,000. Retrieved 9 September 2016, from https://www.theverge.com/2016/3/31/11335272/tesla-model-3-announced-price-release-date-specs-preorder
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Lynch, J., Hwarthon M. (2015, Octomber 17). Australia’s Car Industry One Year from Closing
Its Doors. Retrieved from https://www.smh.com.au/business/the-economy/australias-car-industry-one-year-from-closing-its-doors-20151012-gk7ip0.html#ixzz49nFAV2bE
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