Summary
Differentiation is both the fruit and the core of the advanced consumer society and mature capitalist economy. Conscious consumption, which is replacing careless accumulation, originates from ethical models that develop in each person according to unique standards consistent with personal experience. Differentiation in marketing puts pressure on these ethical models, causing people to pay more for particular services or products. Each such product answers people’s requests for security, future, happiness, and many others. Various things substantiate human worldviews, and marketers and manufacturers can use them to develop services or products’ popularity.
The differentiation strategy allows you to show that the product is suitable for certain people’s niches. In the case of Tesla, this refers to conscious consumers who care about the planet’s future. Such consumers are concerned about the problems of global warming and air pollution, so they are interested in using renewable energy sources. For this reason, Tesla purchased Solar City lithium batteries and incorporated these products into its strategy.
For example, the Tesla Roadster introduced in 2008 and put on sale has become a symbol of a differentiation strategy. Elon Musk then announced his ambitious goals of helping other people to stop burning hydrocarbons and switch to renewable energy sources (Chacar, 2021). Elon Musk’s figure is essential to the differentiation strategy, as he adds personal coloring to production. His media presence and social media eccentricity make people fondly associate Tesla with his behavior, reinforcing the associations. This emotional connection makes people trust the company, ultimately supported by personalized online orders. A particular attitude towards customers and considering each order and purchase unique is a characteristic feature of the modern differentiation strategy.
Analyzing Differentiation: The Demand Side
Analysis of the demand for a product begins with deep knowledge and feeling of human and social needs that are relevant in a given society at a given time. As a result of this analysis, it is determined what characteristics the product should have to motivate people to pay the maximum possible and reasonable amount for it. Thus, Tesla focused on the developed societies of civilized countries, where the environmental agenda and concern for the environment are among the most urgent. These topics can become the centers of parties’ political and economic agendas or individual speakers. A striking example is Greta Thunberg, who managed to impress the masses with her example of caring for the environment and concern for the planet’s future. In another society, except in developed European (in particular, Northern Europe), she would not have been able to win so much media space and popularity. Thus, the environmental agenda in significant economies can regulate demand, including for expensive luxury goods.
The differentiation strategy includes product promotion, sales and service procedures during selection, and continuous product changes; Tesla possesses this, which fixes the company among rivals. Tesla has a strong advertising campaign for its electric vehicles, but more importantly, the leading advertising is on Twitter (Rowland, 2018). Internet users, in particular the most advanced ones, interest Tesla more than others since these people are usually susceptible to environmental values. The sale of electric vehicles is focused on a personal approach and attention to each client, which is very important for buyers and ultimately increases the company’s reputation. Product changes are a logical development of the product with the provision of new categories of goods. Examples are Model S and Model X, successors of previous designs. The purpose of such changes is to demonstrate that the company’s technologies are not rigid but are developing and ready to offer new products to different categories of customers. Among other things, Tesla demonstrates a deep connection with the scientific community and the latest developments in physics and engineering.
Analyzing Differentiation: The Supply Side
Having appeared in the market of electric vehicles and the most complex battery technologies, Tesla was able to survive the competitive struggle. They were helped by the rhetoric of protecting the environment and targeting consumers with environmental values. The use of renewable energy sources and the cleanliness of the car’s operation has become the company’s hallmarks. To develop a differentiation strategy and maintain the offerings at the proper level, Tesla is constantly working on developing a corporate culture and has a consistently high TQM rate.
With the strategy chosen by Tesla and Elon Musk, it is necessary to follow the desired position strictly; otherwise, reputational costs will manifest themselves in a loss in the competition. Such expenses can demonstrate to buyers Tesla’s infidelity to its established unique ideology and elevate neighboring competitors (Tenhundfeld et al., 2019). In this regard, Tesla constantly offers new technologies and cars and tries to spread the released ones around the planet, especially the popular eco-friendly models S and X.
The essential characteristic of Tesla’s differentiation strategy is the scale of the offer. Tesla tries not to be a one-size-fits-all firm with a one-size-fits-all offering, although it is clear to many that the company’s products can be afforded primarily by premium consumers. However, Tesla is trying to make power supplies for solar panels and devices for solar roofs. Even people who are far from driving, devoted pedestrians, will be able not only to know about this company but also to have its products.
Bringing It All Together: The Value Chain in Differentiation Analysis
Differentiation analysis allows companies with a high risk of competition to stay afloat for years and decades. Such companies know their target audience, but at the same time, they strive to expand it in various ways (Grant, 2019). Tesla, for example, doesn’t just shut down its electric car business but demonstrates to customers and anyone who sees its ads that it will benefit everyone. Creating the cheapest solar battery for the benefit of the international community is becoming an ambitious idea, the usefulness of which is undeniable.
Differentiation strategy refers not to the production ruling but to the sale habit and the ability to sell in general. Companies that follow a logical differentiation strategy understand the focus of their customers and try to be sensitive to their intentions and values. The most important task of such companies is demonstrating that the management supports the importance ​​of customers. Customers’ perception of this raises the reputation and popularity of the company, and its market is gradually expanding, bringing in more and more new faces and investments. That is why the differentiation strategy is most clearly manifested in the consumer market, where it is essential to communicate with customers by any available means.
It can be assumed that Tesla’s customers are, in many ways, whimsical and dreamy people who are hard to please in terms of delivering the right offer. However, Elon Musk and his company are trying to follow the logic of technology development with rapidly advancing science. Through connection with science, Elon Musk promotes his values and product to the masses. Tesla makes science more ethical, putting it for the first time in many years, not in defiance of ecology but for the benefit of ecology (Furrier, 2022). Such rhetoric is close to many people, especially the educated part of the population.
References
Chacar, A. (2021). Why Tesla Follows a Product Differentiation Strategy and Aldi one of Cost Leadership-And not the Other Way Around! Web.
Furrier, A. (2022). Tesla: Business Model and Strategic Analysis. Medium. Web.
Grant, R. M. (2019). Contemporary strategy analysis (9th ed.). Wiley & Sons.
Rowland, C. (2018). Tesla, Inc.’s Generic Strategy & Intensive Growth Strategies (Analysis). Panmore Institute. Web.
Tenhundfeld, N. L., de Visser, E. J., Ries, A. J., Finomore, V. S., & Tossell, C. C. (2019). Trust and distrust of automated parking in a Tesla Model X. Human Factors: The Journal of the Human Factors and Ergonomics Society, 62(2), 194–210. Web.