Question

1. Apply pricing principles to 3 of Tesla’s products. How is the product initially priced and then how is the price adapted to the market?

Answer 1

ANSWER:

• Tesla use psychosomatic price included through data-driven goal market segmentation procedure. In 2008, populace be ignorant of the all-electric sports education car of Tesla. They were only recognizable with Toyota's brand “Toyota prius” .
• Tesla’s assignment declaration is based on clean energy. Since they were new. the product line, they did not have sufficient data to set price.
• They did not have the capacity levels as they hadn't sold any cars previously. Tesla also does not we. to set prices on its cost because it might cap the revenue.
• cost, based pricing had many challenges because it might limit profitability, investors might not prefer this strategy and finally it would be difficult increase the price in future.
• Tesla created a pricing strategy based on the target market segment. They found that common pricing a. Psychological principles were the driving forces for the sub-group activity to the brand and the products.
• Tesla adopted prestige pricing strategy for Model 5 and Model X woes. Some of the psychographic profiles that Tesla use.° create the prestige pricing strategy are:

Hardcore loyal users- who cares about the environment, wealthy and takes social responsibility for clean energy. Also, these customers need a status symbol.

Fade users- Customers who Res novelty an likes to keep up with the trend come under this group. Fun-loving and rich users prefer Tesla products for the,- Lifestyle.

-Switchers- These customers have limited,. loyalty to clean energy. They to switch products to other competitors if a lower price is offered

• . Switchers- These customers have lima. loyalty to clean energy. They tend to switch products to other competitors of a lower price is offered.
• The third model that Tesla is model 3. which is an alternative to its luxury offerings. When the            company announced its launch, there were about 400,000 customers who hooked the car.
• However, due to production issues and other delays caused trouble for the company. In order to fit the lower range pricing, the company shrunk the model 3 hatter,
• tweaked manufacturing price and reduced costs M other aspects while maintaining a lower price for the products. However, Tesla was able to maintain a low-pro. margin.
• Thus, TesIa’s pricing strategies was well accepted and adopted in the target market segment.