This articles illustrates the detailed marketing strategy of Tesla along with its product and branding strategies. It covers every aspect of product, pricing, distribution, and promotion strategies that contribute to Tesla’s success.
1. Introduction
Despite all the controversies surrounding Tesla’ CEO- Elon Musk, Tesla is still the most successful electric automotive company in USA.
In 2022, Tesla’ model Y and Tesla model 3 were USA’s best-selling cars:
Source: Statista
In 2022, Tesla earned 5th rank in world’s top 50 most innovative companies – as per BCG.
So, what do you think Why is Tesla so successful?
Tesla marketing strategies make a valuable contribution to its business success. This article presents Tesla strategy analysis by applying 4-P marketing mix framework.
The Elite Legal Marketing team, an agency dedicated to SEO services for lawyers, explain that contrary to a lot of businesses, Tesla benefits for the public place Elon Musk is in, always talking about the topics of the moment, which helps the public mantain Tesla on their minds constantly.
2. Company overview
| Company name | Tesla Inc. |
| Year founded | 2003 |
| CEO | Elon Musk |
| Headquarters | California |
| Number of countries | Three |
| Revenue 2022 (third quarter) | $21.4 billion |
| Profit 2022 (third quarter) | $3.29 billion |
| Brand value 2022 | $76 billion |
| Market capitalization | $388.97 billion |
3. Tesla Marketing Strategy 2023
The article analyzes Tesla’s marketing strategy in light of 4-P marketing mix framework. 4-P framework classifies Tesla marketing strategies into four categories- product, price, place and promotion.
3.1. Tesla Product Strategy
3.1.1. Product Strategy
Tesla business strategy and Tesla mission statement– both are aligned to its product strategy, which is to “accelerate the advent of sustainable transport by offering mass-market electric cars to automotive market as soon as possible”
So, product strategy of Tesla focuses on quick introduction of new sustainable products in automotive market.
3.1.2. Product mix 2023
Tesla offers Model S, Model 3, Model X and Y, and semi-truck. Each model is eco-friendly, and can go from zero to 60 mph in only 3 seconds. Tesla product performance relies on the solar-powered innovation.
3.1.3. Tesla target market
Tesla branding strategy targets the environmentally conscious automotive customers who value contributing to the sustainable future by preferring Tesla.
3.1.4. Segmentation, Targeting and Positioning
| Segmentation | Segmentation Criteria | Targeting | Positioning |
| Geographic | Region | Europe, Asia, North America | Stylish and environment friendly vehicle that goes from zero to 60 mph in less than 3 seconds |
| Density | Rural and urban | 25 to 65 years old | |
| Demographic | Age | ||
| Gender | Both, but greater emphasis on males | ||
| Occupation | Upper middle to upper | ||
| Income | Benefits sought | Long-term cost effectiveness, status, environment friendly products | |
| Personality | Ambitious | ||
| User status | Potential and first time users | ||
| Psychographic | Lifestyle | Environment conscious, aspirer and explorer |
3.1.5. Tesla product timeline 2022-2027
3.1.6. Tesla top performing products
Below graph shows Tesla model 3 is more popular than Tesla Model S, X and Y:
Source: Clean-technica
3.1.7. Key takeaway from Tesla’s product strategy
Tesla’s product strategy weighs heavily in its marketing mix, which means the company invests on improving product quality rather than spending millions of dollars on marketing and advertisement.
3.2. Tesla Pricing Strategy
3.2.1. Skimming pricing strategy
Tesla charges skimming pricing strategy to match its positioning as a premium automotive brand. First, it charges high prices to reflect the product quality, and maintain brand exclusivity and uniqueness. High prices also meet the customers’ status needs. Tesla justifies high prices by focusing on innovation, ecology, and use of sophisticated technology. After charging high prices, Tesla launches low price models to capture greater market share and maximize profitability.
3.2.2. Tesla product prices 2023
Tesla model 3 prices start at $44,490, its long range model begins at $55, 990, and performance model starts at $61,990.
3.2.3. Tesla-BMW price comparison
Here is the price comparison of Tesla model X LR AWD and BMW iX Drive 50 based on 2021 figures:
| Price comparison | Tesla model X LR AWD | BMW iX Drive 50 |
| MSPR | $83,200 | $104,990 |
| Dest. Charge | +$995 | +$1200 |
| Tax credit | $7,500 | n/a |
| Effective price | $76,695 | $106,190 |
Source: Inside EVs
3.2.4. Key takeaway from Tesla’s pricing strategy
Although, Tesla charges more than its competitors (as evident in above table), still its assembly plants find it difficult to manage the high demand. Innovation, advanced tech and eco-friendliness are some key factors that justify Tesla’s high prices.
3.3. Tesla place/distribution strategy
3.3.1. Tesla distribution strategy
Tesla business model depends on the direct distribution strategy, and eliminates the need for third party distributors. Tesla is vertically integrated, which enables company to manufacture its products in Tesla giga-factory. Direct distribution model then allows the company to distribute its products through company’s website.
3.3.2. Tesla distribution channels
Tesla only relies on the online distribution channel to distribute its product. Before 2019, Tesla utilized both- physical and online distribution channels, but after 2019, Tesla decided to only accept online orders. New York Times considered Tesla’s online only approach as an important reason behind company’s success despite all hardships.
3.3.3. Tesla product distribution- 2012 to 2022:
Tesla’s deliveries in 2022 equate (almost) its total deliveries from 2012 to 2020:
Source: Statista
3.3.4. Tesla distribution challenges
Tesla is finding it difficult to meet the growing demand. The delivery delays, limited charging infrastructure, complex purchase process, material shortage and supply chain disruptions are some production and distribution challenges that are negatively affecting brand value, and seek immediate attention.
3.3.5. Key take away from Tesla’s distribution strategy
The franchise free, online only distribution model of Tesla enhances its control over business operations, and provides competitive edge over rivals.
3.4. Tesla promotion strategy
Tesla’s marketing strategy is based on the word of mouth marketing, online awareness and active social engagement of company’s CEO- Elon Musk.
3.4.1. Tesla advertising strategy
Tesla adopts zero-dollar-advertising approach, and Tesla advertising budget is zero. Despite this, Tesla’s valuation exceeds that of GM and Ford combined- as reported by Harvard Business Review.
Tesla’s promotional strategy largely depends on the viral marketing. For instance, when Tesla released Model S for kids, the product was largely promoted through online viral videos. Another example is the launch of cyber-truck. Tesla made its product viral by breaking truck’s window, which immediately turned it into viral sensation.
Tesla marketing strategies focus on developing one-to-one customer engagement, and Elon Musk has been consistent in it. Elon Musk and marketing team consistently find ways to create media buzz for Tesla.
As per Business Insider, Elon Musk’s active social engagement as high-tech leader contributes to brand building. For instance, in 2015, Elon Musk’s speech at Sorbonne, and calling for imposition of carbon tax built positive brand image in customers’ minds.
3.4.4. Tesla public relations
Tesla has unique PR strategy. In a surprising move, Elon Musk dismissed its public relations department, and started acted as the company’s PR. Since then, Elon Musk has consistently brought public’s attention to its products. Some highly successful PR campaigns drove by Musk include- cyber truck gate, Elon buying twitter, Model X dances, and autonomous taxi service.
3.4.5. Key takeaway from Tesla’s promotional strategy
Tesla’s unconventional PR strategy, reliance on viral marketing and zero-advertising budget makes itself set apart from competitors.
Tesla’s marketing strategy effectiveness reflects into its strong competitive positioning, as presented below.
If you are also a business operator, you can learn Tesla’s marketing strategy. If you don’t have the budget to adopt those strategies, pins are an inexpensive and effective way to promote.
Depending on the products and services you sell, you can design pins on related themes. Holding limited lapel pin collection activities, complemented by other benefits, is a useful method to create interaction with customers. Sharing these pins on social media not only serves a promotional purpose but also attracts other audiences.
4. Tesla Competitor Analysis 2023
Tesla holds leadership position in plug-in electric vehicle market. Tesla’s key competitors include- BYD, Wuling, Volkswagon, BMW, Mercedes, SAIC, Volvo, Audi and Hyundai. Following graph shows market share of each market player, based on number of worldwide sales.
Source: Statista
5. Recommendations
• Increase product awareness and make product purchase process simpler and easier
• Install more charging stations, and reduce the delivery delays
• Launch more inexpensive cars to grab more market share
• Increase product variety by adding more hybrid and plug-in hybrid vehicles
• Resolve customers’ concerns towards fully self-driving cars
• Reduce reliance on the Elon Musk being sole representative, and expand marketing efforts to avoid running a ‘one man show’
6. Concluding remarks
Tesla marketing strategies are unconventional, and make valuable contribution to the overall business success. The analysis of Tesla’s marketing strategy in light of marketing mix framework shows that all marketing strategies are interconnected, and well-aligned with the Tesla business strategy.
Hope you found this article useful. If you want to know more about Tesla’s strengths and weaknesses, have a look on Tesla SWOT analysis 2023 (internal linking).
7. References
Richter, F. (2023b, January 3). Tesla Still Dominates the U.S. EV Market. Statista Infographics.
Consultancy.uk. (2022b, September 23). The world’s most innovative companies (according to BCG).
Shahan, Z. (2021, January 2). 499,550 Tesla Sales In 2020 (CleanTechnica Charts). CleanTechnica.
Kane, M. (2021, December 29). BMW iX Vs Tesla, Cadillac, Audi And Rivian: Price, Range Compared. InsideEVs.
Stenquist, P. (2022, June 21). Tesla Is Forcing the Auto Industry to Rethink How It Sells Cars. The New York Times.
Richter, F. (2023c, January 3). Tesla’s 2022 Deliveries Nearly Match Its 2012-2020 Total. Statista Infographics.
Shipley, L. (2020, February 28). How Tesla Sets Itself Apart. Harvard Business Review.
Staff, S. I. (2020, January 30). How Tesla Turned the Cybertruck Launch into a Viral Marketing Campaign Using a T-Shirt. Startup Info.
DeBord, M. (2020, August 1). Tesla has a huge lead over other automakers. See how the electric-car company’s brand became so mighty. Business Insider.
Worldwide PEV sales by brand 2022 | Statista. (2023, February 27). Statista.
