Question

This case analysis is designed to encourage you to evaluate the pricing and promotion strategies for Tesla Motors, the California based company. The company designs, manufactures, and sells electric cars and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components and markets its vehicles through Tesla stores and over the Internet. The company has 80 stores and galleries in North America, Europe, and Asia. Currently, Tesla Motors is planning to go into Indian market.

Imagine you have been hired as a consultant to the VP of Worldwide Sales and Service for Tesla Motors Mr. Jerome Guillen. The VP wants to get an objective opinion from someone outside the company who is familiar with international marketing basics.

Your job is to write a 1- to 3-page memo (single spaced) critically analyzing Tesla's promotion and pricing strategy for Tesla Model 3 if the company introduces this model into the market in India. Take into consideration the current promotion and pricing tactics used by the company in the United States. Make sure to address the following issues:

Evaluate if the current promotion strategies employed by Tesla Motors in the United States should be adapted to meet market needs in India. If so, how? If not, why not?

Assess if the current pricing strategies employed by Tesla Motors in the United States should be adapted to meet market needs in India. If so, how? If not, why not?

What key challenges would Tesla Motors face in India compared with its experience in China? Propose creative strategies to tackle these challenges in India.

Do you think the Tesla Model 3 would help Tesla successfully enter the Indian market? Explain your position.

Answer 1

It is an intelligent decision to make a foray into the Indian market for Electrical cars by Tesla as the market is supposed to bro at an exceptional 37% in the coming years. This exceptional growth rate is expected due to numerous initiatives undertaken by the government by offering incentives to encourage use of more environmental friendly means of transportation since air pollution is a major concern in India especially in all the important cities. The use of electrical vehicles in India is growing fast but it has moved in a direction quite opposite from the United States as the beginning was from the bottom level including two wheelers and three wheelers and is gradually ramping up to affordable family cars. Since Tesla 3 is aimed exactly at this segment of consumers the response from India for the product should definitely be encouraging. However the market is currently in the nascent stage with consumers not really confident about the life and durability of electric cars and also the availability of the support system it would require for charging.

As the United States and India are two entirely different markets economically and culturally the promotional strategy required for India cannot be a standard adoption and needs to be modified to meet the consumer expectations as well as b suitable for the mode of advertisement largely employed in India for maximum outreach. The minimum advertisement strategy adopted by Tesla in the US and the anti-sell strategy adopted for Tesla 3 would just not be feasible in India. The Indian market is still influenced largely by advertisements through television newspapers and direct promotional activities. Also India is a vast country with large differences in culture and economy over various parts. It is important to identify the target areas with highest probability for sales and market aggressively at the same time adopting means to educate the consumer on the advantages of an electric vehicle. The stress has to be placed on the environmental and social initiative as the motivator switching to electric cars as within India a car is regarded as a status symbol and switching to anything which is more viable to operate, may seem like a drop in status, as depicting the reason for selection as unaffordability.

Another major sector which would require a lot of attention and a tailor made marketing and sales solution is the corporate sector which is proving to be one of the largest consumers of electric vehicles for transporting the large number of employees. As most corporates operating in the Information technology sector offer pickup and drop facilities to their employees this is emerging as a very viable solution for them. Government bodies and organisations are another target group which could prove to be a bulk buyers. As the government is taking mass initiatives to not only and courage all the citizens two switch two environment friendly transportation modes but also insisting on setting an example adoption of electric cars and vehicles throughout its organisations. Tesla should look at setting up expensive charging stations across all areas with maximum expectation of customers. The major requirement for this should be forecast of demand well-analysed before implementation.

Indian market is very different from the markets in China as before the advent of Tesla China was very much aware of electronic Modes of transport and had been using the same for quite a while. Also the Chinese consumer does not expect as much from a car as does an Indian one. The Dynamics involved marketing of any product including identifying demand, strategizing the marketing campaign, aligning the supply to the demand through production control, insurance effective customer service and feedback, implementing changes based on feedback to ensure customer satisfaction and remove product drawbacks if any. The entire procedure requires a certain level of customisation like India especially when the target consumer is the middle class. The consumer is largely conservative in the approach for acquiring assets such as cars and would you like to adopt a wait and watch policy towards any new product or technology before taking the plunge. The major requirement in India is present the tesla as Eka which is vehicle with the social conscience as it is targeted at the middle class and the emerging personality within this class presently in India is of urban working couple who are extremely aware of environmental issues and how it can harm the future generations.

The Tesla model 3 should be a perfect choice for the Indian customer presently as it fix the gap in the electric car market. The electric car market in India is presently depending on Mahindra and Mahindra e2o and the tesla is a few notches above that entering into a segment where currently no competition exists. The design and look of the Tesla are superior compared to some of the petrol and diesel models of vehicles in the same category. Tesla 3 is the right model who introduced into the Indian markets as the Model S would seem a little too high a segment to experiment with electronic cars for India. As stated earlier luxury car segment switching to electronic cars may not happen so fast in India. With the backing of an excellent service infrastructure in the form of charging stations and aggressive marketing campaign designed to arouse the conscience of the younger generation which is highly aware of requirement for green initiatives to ensure the next generation has a safe planet.

Electronic car market in India may still be in the nascent stage and the projected 37% growth in the coming 4 to 5 years may look very attractive but a major consideration for pricing would have to be to acknowledge massive presence of Suzuki motors in collaboration with Maruti which is the market leader and has held the position for years in the sedan car segment. They already have a well-established service base across the nation and the major reason for their massive success is mostly excellent service supported by very competitive pricing. Tesla has to consider offering pricing structure which is competitive and has sufficient visible product value to be able to swing the decision of the customer towards itself. I KEEP CLEAN THE AIR WE BREATHE is the kind of slogan which would work for marketing the Tesla model 3 in India.