Introduction
Innovative companies often face obstacles in their activities, which is expressed in consumer distrust. Tesla consumers have reasons not to trust a company’s products that position itself as an innovative brand. Tesla’s recent media scandal involved a lawsuit that sought to test the organization for fraudulent advertising. Tesla’s fatal accidents contradict the company’s claims about the safety of Autopilot. To maintain its reputation and profitability, Tesla needs to allocate funds for advertising and marketing, change its promotion strategy, launch a new low-cost model, and expand its presence in the international market.
Defining the Marketing Problem
Tesla is often at the center of public discussions. The company’s accusations relate to its CEO, Elon Musk, his risky decisions, and his activity on social networks. One of the latest scandals was false advertising, which led the company to a lawsuit. Since its beginning, Tesla has positioned itself as an innovative company with appropriate advertising. Autopilot capabilities have been promoted as “probably better” than a human driver (Spector & Levine, 2022). Autopilot was offered as an optional feature, but proved to be unreliable, leading to several fatal accidents.
One of the accusations in court was the false advertising of Tesla, which promised guaranteed safety. The race for innovation was one of the main reasons that led to the scandal. The belief that the driver may not touch the steering wheel when driving the new Autopilot version has proven unfounded (Mayorquin, 2022). However, the company has also posted warnings that the vehicle cannot be fully autonomous on the company’s website (Spector & Levine, 2022). Thus, safety instructions posted online diverged from public promotional materials.
Tesla may be found guilty of misleading consumers and investors through unsubstantiated advertising claims about the capabilities of its technologies. The case received a wide public outcry due to the increased number of fatal electric car accidents. The reason behind Tesla’s persecution may go deeper than a misguided advertising strategy. Since self-driving electric vehicles are an innovative product in the industry, a special approach is needed to prepare the public for the correct use of the product.
Social rejection and audience mishandling constantly put Tesla at the center of public controversy (Matousek, 2022). At the same time, being in the spotlight can benefit the company, as demand remains steadily growing. However, Tesla can increase profits by tailoring its marketing strategy to sell innovative products.
SWOT Analysis
Strengths
One of Tesla’s most notable strengths is its brand value. At the moment, Tesla is the fifth most valuable brand, and its profits are expected to increase due to the purchases of other large companies (Long et al., 2019). In addition, Tesla competes strongly in the domestic electric vehicle market, occupying more than half of it (Thomas & Maine, 2019). The company is competitive and expects regular growth in sales associated with an increase in demand for electric vehicles.
Tesla primarily invests in R&D, which ensures thorough market research and timely release of new products (Kim, 2020). This company has an effective leader who is its marketing face, successfully maintaining brand awareness. The company’s success is determined by innovation, which regularly attracts customers. In general, Tesla can be described as a company with a diversified business model and sustainable development.
Weaknesses
One of Tesla’s main weaknesses is the negative image it creates in the media. The company does not significantly invest in marketing, concentrating on research and development of new products (Kim, 2020). However, due to the media, details of cases of discrimination and poor working conditions regularly emerge. The company’s social performance remains low due to the high number of complaints, damaging the brand’s reputation and image (Tong et al., 2023).
At the same time, Tesla has somewhat inflated prices with a sensitive share price that regularly fluctuates to the downside. An essential role in creating a negative reputation is played by the issue of Autopilot safety and consumer distrust (Matousek, 2022). The company regularly appears publicly due to Elon Musk’s controversial statements and security and privacy violations.
Opportunities
Tesla’s main opportunity is to expand into new markets, including Asian ones. To increase customer reach, Tesla can use the opportunity to expand the range of models to include more economical and cheaper options. To satisfy the possibility of autonomous driving, Tesla needs to increase investment in developing safer protocols and capturing consumer confidence (Kim, 2020). The new marketing strategy should enhance the brand’s reputation and guarantee safe driving to maintain sustainable development.
Threats
The high cost of materials for production and the expected further rise in price threaten Tesla. The use of self-driving cars continues to raise concerns among consumers, which could lead to a drop in demand due to growing distrust (Lee & Kolodge, 2020). Competition remains a significant threat as more manufacturers launch electric vehicle lines and invest in self-driving vehicles. Demand for luxury cars is currently volatile amid global tensions. Reputational damage from Elon Musk’s controversial remarks on social media also threatens Tesla’s stability.
The Action Plan
Overall Strategy
Based on the analysis of Tesla’s problems, a new marketing strategy aimed primarily at maintaining a stable reputation and returning consumer confidence is proposed. First, marketing expenses must be distributed, which the company will need to allocate in an amount that is not inferior to development funds (Kim, 2020). In addition, based on volatile market conditions and consumer distrust, Tesla needs to adapt its target market and brand positioning.
Tesla’s target market may remain predominantly domestic, but expansion is needed to improve resilience to crises. The Asian market is best suited for expansion, as demand for high-tech electric vehicles is growing in this area (Song et al., 2022). Tesla has enough resources to compete with home brands. The company has global recognition, so capturing a new market share is not risky.
In addition, Tesla can increase profits and reduce risks by targeting new customers. Currently, the target audience is wealthy people with above-average incomes. Developing a new model at a more affordable price could be the solution to capture the target young buyers looking for innovative solutions.
Tesla also needs to reform its approach to product positioning. Since the main complaint from consumers has become the lack of a guarantee of safety, the company needs to raise awareness about the correct use of its products. With the help of modified advertising and a slogan calling for safe driving, Tesla can reduce the number of unpleasant accidents. At the same time, the company must continue to insist on the reputation of an innovative manufacturer (Kim, 2020). The focus on innovation and safety will allow Tesla to count on consumer confidence, which will be especially valuable when it becomes possible to release a fully autonomous vehicle for mass use.
Overall Marketing Mix
Product
A new product for Tesla could be a budget car with an improved basic Autopilot system. At the same time, it can still be positioned as an additional function, subject to instructions and safety requirements. The budget version will respond to falling demand for luxury cars and declining consumer incomes (Bauer et al., 2021). The new product will capture new target customers and support the company’s product innovation brand. To maintain profitability, Tesla may include several additional plug-in options.
Price
The main advantage of Tesla’s new model should be an attractive, competitive price. Since Tesla’s cars remain more expensive than those of other brands, this strategy could be a way to get ahead of the competition (Thomas & Maine, 2019). To achieve this goal, Tesla needs a model that will be 30% cheaper than the company’s mid-priced electric car segment. Tesla will not lose profitability as more buyers want to get acquainted with the new model. At the same time, focusing on young consumers, who especially appreciate the innovative approach, is essential.
Place
The new model must be released in variations for domestic, European, and Asian markets. As interest in innovative and sustainable vehicles grows across Asia, Tesla may use this opportunity to launch a new product (Song et al., 2022). At the same time, production in the home market should also be maintained to guarantee stable profits. Not too widely represented, but also not new, the European market can also successfully promote a new electric car model.
Promotion
Tesla needs to pay more attention to promoting both the new model and the old line. Marketing expenses and proper strategy development will help to avoid new lawsuits and subsequent reputational damage. The company knows that not all motorists follow Tesla’s driving instructions (Matousek, 2022). Therefore, the company needs to move away from loud statements in favor of calls for responsible and safe driving. The advertising campaign must be entirely accurate and not make promises about technologies that are not fully mastered.
Since Tesla was refusing additional promotional expenses, building a new stable advertising strategy is necessary. However, since the company has already established product advertising on social networks, it is necessary to use this popular channel. Advertising in personal and corporate accounts will allow Tesla to get closer to the target young audience of the new model and will not require significant financial investments (Kim, 2020). However, standard forms of promotion also need to be mastered, which may include television advertisements or visual banners on the roads. The new approach will allow for more massive coverage, which will be especially important when entering a new market.
Conclusion
Tesla’s main marketing problem is a lack of customer confidence, which false advertisements undermine. This is possible because Tesla does not add additional advertising and marketing costs. The solution to this problem may be to change the promotional strategy to encourage safe driving. Changes are needed as the company may plan to release a budget car model and enter a new market. An improved PR campaign will allow the company to maintain its reputation, win new loyal customers, and expand its presence.
References
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Matousek, M. (2022). 18 controversies that have plagued Tesla. Business Insider. Web.
Mayorquin, O. (2022). Elon Musk’s Tesla accused of fraud, false advertising of “autopilot” technology in lawsuit. USA Today. Web.
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