Learning Outcomes:
- Identify the principal managerial issues and policies necessary for success in international marketing.
- Examine and evaluate methods of identifying and qualifying market potential in different parts of the world.
- Illustrate the nature of overseas distribution systems (including agents and joint- ventures) and demonstrate the marketing implications of differences in culture in consumer behavior.
Assessment Task
All learning outcomes will be assessed.
Background
Tesla Motors develops, manufactures and sells electric vehicles and powertrain components. Incorporated in 2003 with its headquarters in Palo Alto, California,Tesla has 17 stores worldwide to sell its cars but customers are encouraged to buy online.
According to Tesla, it opens their stores in places "people regularly visit in a relatively open-minded buying mood." These stores help Teslainteract with potential customers (Market realist, 2015).
Electric vehicles are not a recent concept;however they face problems with mainstream adoption. Their price point is out of reach for a majority of the population; they depreciate quicker than their Internal Combustion Engine counterparts, and have very limited range.
Tesla market share is set to comeunder increased scrutiny as other automobile companies namely Porsche, Audi, and Mercedes are diversifying from internal combustible engine vehicles and releasing electric variants before the end of the decade (Market mogul, 2015). The entrance of other luxury electric vehicles is likely to apply significant pressure on Tesla's current profit margin of 29.6%.
Focused on expanding its manufacturing across the world, Tesla now has manufacturing sectors in Tilburg Netherlands, Lanthrop California, and a Gigafactory in Nevada that is planned to mass-produce the affordable Model 3. In 2020, this Gigafactory will also produce more lithium ion batteries than the world's total combined output in 2013. Plans to reduce its battery costs by more than 30% will position Tesla with competitive advantage over other electric vehicle manufacturers.
Their differentiated selling strategy allows buyers to book a car online, without having to visit any of the dealers. However, many argue that not having a dealer could pose key challenges; additionally Tesla strategy to opt out of having a franchise dealer model has led to lawsuits questioning the distribution strategy in the USA.
Moreover, selling more vehicles online reduces the company's selling costs. The physical stores serve only as showrooms for Tesla vehicles.Tesla CEO Elon Musk states "Our technology is different, our car is different, and, as a result, our stores are intentionally different."
Expansion into international markets is crucial for Tesla. However, the questionbeing asked is can the Teslastrategy sustain itself in its planned global expansion over the next 5 years? Or will it have to follow the footsteps of other US automakers such as Ford and General Motors to expand in overseas markets.
Consultancy brief
Hired as a marketing consultant, you have been asked by Tesla Motors to carry out a thorough analysis of the market and recommend one international growth marketfor it to enter in 2018.
The primary focus for the recommended market is market entry through physical store presence.
(Growth market should be a country where there is currently no online or physical Tesla store).
You should prepare a report for the board of directors addressing your consultancy brief, this should include:
- An analysis of the macro and micro factors impacting on the automobile industry (key focus on electric vehicles)
- An analysis of Tesla Motors internal business factors
- An evaluation of markets, which should include an identified shortlist
- A clear and identified screening criterion. You should select onerecommended market and provide clear justification as to why the market has been selected.
- A recommended market entry strategy to take Tesla into the chosen market with clear justifications for your choice.
- Recommendedadaptations to Tesla'smarketing mix for the proposed market, ensuring differences in culture and consumer behaviour are recognised in their marketing mix activity
Detailed analysis should be developed and placed in the appendix of your report, with summaries of analysis in the main body of the report cross referencing to the appendix.
Additional information will be available on the portal to support your research but you will need to conduct your own research into macro and micro factors using the online library.