Tesla SWOT Analysis

Tesla SWOT Analysis

Strengths

Tesla has been recognized as a major employer who has positively impacted on the level of employment in the US market (Armstrong, 2006). According to the Wall Street Journal, it has become an ideal organization for employees based on the company’s culture of innovation and diversity.  The company has able a leader in the automotive industry, with the country delivering more than 350,000 vehicles in 2019.  The company has also dominated the US electric vehicle sales. For example, in 2019, Tesla Model 3 was the most sold brand with the number of units reaching 187, 971.  During that year, Chevrolet Volt stood at 155, 477.  Tesla has profoundly invested in innovation. As a result of increasing the use of electric sports cars and semi-trucks, the market expects Tesla to develop profitable brands.

Weaknesses

While launching new brands, Tesla is faced with production delays. For example, while trying to launch Model X, the company was faced with manufacturing challenges resulting in delays in the distribution process. As a result of complicated procedures, the company may experience unbalanced demand and supply and fail to meet the requirements of its production. Tesla has lead in the production of energy-saving cars, but its volume of production is low. Even though the company focuses on increasing the volume of production of its brand Model 3, it is faced with management resources and a high cost of production, especially in Gigafactory 1.

Opportunities

The Asian market is not saturated, meaning that this is an opportunity for expansion and growth for Tesla. The company should also invest more in the renewable energy market since it also provides an opportunity. Tesla has embarked on the production of the Model 3 brand that is less expensive compared to Model S. The company is focused on producing its own battery cells. This strategy will significantly impact on the Tesla rate of manufacturing besides the reduction of the cost of production.

Threats

Despite the high standard of manufacturing and premium brands that Tesla produces, the company has faced various claims of product liability, and this can negatively impact on the financial strength of the company.  Even though the company has come up with various autopilot brands, not all of them have succeeded in the case of an accident. The failure of its technology has been the major cause of claims and lawsuits. The alternative fuel vehicles and self-driving technology offer stiff competition to Tesla. In addition, companies such as Toyota, General Motors, and BMW are aggressive competitors for Tesla. As a result of complex engineering procedures, many flaws have noted in Tesla’s and energy products.

Section C. Targeting and Positioning

Targeting

Demographics

Demographics entail the identifiable features of final consumers, organizational, and final consumers. Tesla can use demographics technique of targeting its customers by segmenting its customers who have similar desires and needs and have different backgrounds. Some of the key aspects that the company can use to segment its market include the level of income, age, family size, race, occupation, religion, marital status, and education level (Porter, Argyres and McGahan, 2002). Once the company identifies the social differences that exist among its customers, it will be able to provide car brands that meet its needs without any kind of discrimination.

Geographics

Geographics refer to the basic features of states, towns, countries, and regions. Tesla will need to combine factors including the size of its customers, location, transportation network, growth pattern, legislation, media, and cost of living of its customers. By combining these factors, the company is able to identify the right location that will establish a new outlet.

Behavioristics

Behavioristics variables that Tesla should consider are benefits sought by customers, user rate, the status of users, readiness stage, the attitudes of customers, and loyalty rate. For Tesla to remain competitive in the market and effectively face off its competitors, it will need to consider the frequency of purchase of its customers, time of the year when it will launch a new brand, the degree of customers’ loyalty, time involved before customers make purchasing decision and substitutes locations where customers can access rival brands (Sheth, Sisodia, and Sharma, 2000).

Psychographics

These entail attributes associated with values, lifestyles, personality, attitudes, and interests of customers. For Tesla to ensure that its brands meet the needs of its customers, it needs to consider the lifestyles of families, social class of its customers, brand loyalty, and opinions. In this way, the company will identify the way its targeted customers think about themselves as compared to others.

Linguistics

Linguistics refers to the way customers communicate with their languages. This customer characteristic looks specifically at how social factors such as age, speaker’s gender, sounds, and ethnicity integrates. While penetrating new markets, Tesla will need to consider additional factors, for example, key phrases, the pronunciation of the customers, keywords, misspellings, and regional differences among the targeted consumers. In this way, the company’s marketing executives will adopt effective policies to communicate with their customers.

HK University Students and Key Characteristics

HK University are from different regions and races. Hong Kong is renowned for the cultural blend adopted by the higher learning institutions. The city is also noted as the melting point for Asian and Western culture. Based on its close proximity to China, the city of Hong Kong is able to attract students from various parts of the world who want to study in China. The section below discusses major characteristics in this category of customers.

Geographic

The customers are from various geographic areas implying that their wants will vary according to their values and culture. An organization that targets HK students should consider the kind of products they require and value, meaning that the firm will benefit from higher demand. In addition, it is vital to consider the boundaries within which an organization will operate to avoid providing

Demographic

This entails identification and profiling customers based on their race, age, gender, occupation, education level, and marital status. The following profile can be used when targeting customers located at HK University.

Consumer Market

Income

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Age

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Gender

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Education

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Family Size

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Positioning

A perpetual map is used by organizations to comprehend how their target consumers fee and vie regarding a product or a brand. Through this map, an organization can understand their competitive position. Besides, organizations can make a suitable comparison of the values that they can provide to their customers.  Tesla should offer great quality and affordable prices as two major values for its target customers.

Tesla Perpetual Map

Great Quality

Great quality refers to what a brand can do for a consumer. While some customers perceive quality as a point of price, others like a product since it is greener. Through the provision of great quality brands, Tesla would not only impact on the purchasing decision of its customers but also its profitability will increase. In addition, the company will establish a close connection with its target consumers. By creating loyalty and confidence of customers, the company can undertake more business strategies, for example, raising the prices and performing promotional activities.

Quality brands will also produce fewer recalls and customer complaints. Most of Tesla competitors have experienced many recalls of their vehicles due to poor quality. According to various marketing studies, high-quality products results in a repeated purchase. This implies that Tesla should invest more funds and research in perfecting its brands before launching in the market to reduce recalls and customer complaints.

Affordable Prices

For Tesla to meet the expectations of its target customers, it does only need to offer great quality brands, but also its prices should be affordable. One of the key impacts of this strategy is that it will provide customers with an opportunity to experience the company’s products. By providing low-cost products, the customers will easily refer to other customers since people tend to assist their families and friends out.

Potential Changes That Tesla Company Can Do

Tesla can make changes in its pricing approach and use market-penetration pricing, especially in the emerging markets. This pricing strategy entails setting a low initial price with the objective of penetrating the market deeply and quickly (Kotler and Armstrong, 2008). In reference to improving the quality of its brands, Tesla can establish research and development centers in developing to ensure their brands in these markets meet the needs of the local market. For example, as the company market Solar Roof, Powerwall, and Powerpack products in the developing countries, it will need to identify any loophole that may impact on the environmental safety of these countries. This will improve the image of the company since it will be seen to be concerned about the health of its customers. Likewise, the company will enjoy the support of local government and be protected from unfavorable competition.

Section D. Recommendations to Tesla

Improving the Products

Tesla should undertake additional research to ensure it provides brands that meet the needs of its market. One of the mistakes that Tesla did was the creation of a value brand within its premium line. Even after making a production mistake on Cimarron by GM and Versailles by Ford, the company still made a similar mistake on its Model 3 brand. The mistakes done by Ford and GM reduced their sales on lines that experienced high margins. The adverse effects may still impact on Model 3 and lower Tesla’s sales. This implies that the company needs to undertake extensive research and study the loopholes that are done by its competitors that have impacted their sales.

While Tesla is known to produce quality products that meet the needs of its customers, there is a need for the company to consider the feedback of its customers after it launches its brands. This will make act on any defect in a timely manner. Given the increasing demand for energy-saving vehicles, new technologies are emerging in this industry. For Tesla to effectively compete with its competitors, the company should undertake further research to identify the demerits of new technologies. This will ensure that its brands are unique and reduce the number of recalls that the competitors are likely to experience after releasing their products in the market.

Improving Promotion Strategies

The increasing use of social media by marketers and individual consumers, provide an opportunity for Tesla since it can also use this platform to promote its products. For example, YouTube provides a good opportunity for promoting new brands since target customers can easily see the features of these products and their performance on roads. Tesla can also establish new FaceBook pages that will target young consumers who are financially stable and are attracted to luxurious brands. In this way, the consumers will use word-of-mouth marketing to promote Tesla’s brand, thus making the sales to increase.

During festival seasons, some families tend to invest in new vehicles with the objective of making their holidays happier. Tesla can use this opportunity to promote its products, especially in developed countries where customers spend more during holidays. In addition, the company can use this opportunity to educate target customers about the importance of road safety and how to avoid accidents. This is a great opportunity for Tesla to promote its Model 3 brand since it is one of the safest brands when compared to its competitors.

As a way of creating strong brand awareness, Tesla should invest more in corporate social responsibilities. For example, the company should sponsor sporting activities, especially in developing countries. This will make the participants seek more information regarding the Tesla brands leading to higher brand awareness. The company should sponsor cultural activities that bring together different cultures. This makes the company to be seen as an organization that values diversity. Customers are currently not only attracted by the quality of products, but they also value companies that value diversity in their workplace, meaning that Tesla can use this aspect to promote its brands at the local and global markets.

References

About Tesla. Available from https://www.tesla.com/about

Armstrong, M. 2006. A handbook of Human Resource Management Practice. London: Kogan Page.

Kotler, P, and Armstrong, G. 2008. Principles of Marketing. Saddle River: Pearson Education.

Porter, M., Argyres, N, and McGahan, M. 2002. An Interview with Michael Porter, The Academy of Management Executive (1993-2005). 16 (2): 13–42.

Sheth, J., Sisodia, S and Sharma, A. 2000. The Antecedents and Consequences of Customer-Centric Marketing, Journal of the Academy of Marketing Science, Vol. 28, No. 1.