Marketing Plan

Marketing Plan For TESLA MOTORS Model S Table of Contents Executive Summary1 1 Introduction2 1 1 Purpose2 1 2 Background2 1 2 1 Company2 1 2 2Model S2 1 3 Scope3 1 4 Limitations3 1 5 Customer Group3 1 6 Trend Overview4 2 Market Segmentation and Targeting5 2 1 Segmentation5 2 1 1 Metros in Terms of Wealth5 2 1 2 Occupation6 2 1 3 Psychographic Segmentation7 2 2 Targeting8 2 2 1 Targeting Strategy8 2 3 Positioning10 3 Marketing Objective10 4 Marketing Mix Strategies11 4 1 Product moreover the competitor statistics has been analyzed to make the plan more practical Although some marketing theories have been used in helping strategy making relying heavily on academic journals for devising this plan has been considered beyond the scope 1 4 Limitations This report would be subjected to numerous limitations include 1 Since this report prepares a marketing plan for entering Indian automotive market the costs involved in different phases may not be accurate as there may be many hidden expenses exist and 2 Because the report is only focusing on brand promotion and marketing Model S the plan may be ambitious aiming at maximum brand reach therefore costs involved may not be the most efficient 1 5 Customer Group Our targeting customer group mainly maintains four features High income 4 Strong eco friendly awareness High tech products preference Luxury preference 1 6 Trend Overview We keep an optimistic attitude towards the future trend of our product for three reasons Firstly Indian central government announced many incentive policies for environmentally friendly cars A vital policy for our product is in January 2013 the Indian government announced a new plan to help achieving the goal of have seven million electric vehicles on the road by 2020 This plan will offer subsidies up to INR 150 000 for cars and INR50 000 on two wheelers Mallick 2014 Secondly India s car industry has skidded on to an icy patch and is set for a second consecutive year of decline however the segment of luxury car is the only one still accelerating In India the luxury car segment has been growing at an average rate of 20 During the global financial crisis the luxury car segment grew at 23 to 6 671 vehicles Luxury Car Market in India 2014 Lastly we have finished a Porter s five force model analysis see appendix 1 for Luxury car segment in the Indian market and a SWOT analysis see appendix 2 for the Tesla Model S The result is inspiring which shows the Indian luxury automobile market is really attractive and has a high potential for making profit 5 2 Market Segmentation and Targeting India is the seventh largest country in the world containing 28 states and 7 union territories Segmenting Indian market and identifying the apt segments is crucial for our plan 2 1 Segmentation Taking the features of the product into consideration we will segment the Indian market in terms of purchasing power occupation and psychographics 2 1 1 Metros in terms of wealth We analysed all Indian metro cities in terms of wealth purchasing power parity GDP consumption figures see appendix 3 After the analysis we list 10 metros in India distributed evenly between North and South India in terms of sheer buying capacity KPMG 2014 The reason for evenly spreading the metros in North and South India is to benefit in uniform expansion of the brand reach in the future The top 10 metros after segmentation are Mumbai in Maharashtra Delhi National Capital territory Chennai in Tamil Nadu Bangalore in Karnataka Cochin in Kerala Kolkata in West Bengal Hyderabad in Andra Pradesh Ahmedabad in Gujarat 6 Pune in Maharashtra Ludhiana in Punjab The above cities are also the major markets of our main three German competitors namely Audi Mercedes Benz and BMW see appendix 4 Almost 45 of the sales of these German automakers are translated from Mumbai and Delhi Mihir 2014 Chennai and Bengaluru are the luxury automobile market leaders in South India Cochin from Kerala has emerged to be the fastest growing luxury market in India due to large amounts of disposable income generated from manufacturing of Rubber tea and coffee Chauhan 2013 All the luxury automobile companies have followed this segmentation while entering Indian Market as it is the easiest and safest way to segment the market Since each state in India has a different culture and separate governance it is viable to segment this way owing to the state specific taxes and laws 2 1 2 Occupation The luxury car customers can be segmented in terms of occupation as well The highest paid jobs in India were considered and compared against occupation of existing luxury car customers see appendix 6 The top jobs considered for segmenting are see appendix 5 IT Professionals Chartered Accountants Investment Bankers Doctors 7 CEOs CFOs Lawyers However the section of businessmen who formed the upper class society in India weren t listed in any income statistics The data from existing luxury car customers revealed almost 40 to be entrepreneurs The data has been taken from Audi database as Audi is the market leader of luxury car segment in India 2 1 3 Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers The consumer population in luxury markets can be divided into three categories Functional This segment consists of consumers who buy luxury goods for their high quality and exceptional functionality The people in this category decide to buy based on their logic rather than emotions In India functional segment consumer population is highest among the three segments Rewarding The status symbol is the driving factor for this segment The average age for this category is 35 years People under this category are a major force behind the increasing sales figures of luxury cars in India Indulgence This category comprises the youngest lot out of the three categories Currently this category is experiencing highest growth in Delhi and NCR regions 8 The above mentioned three categories are present in all the top metros in India Consumption of luxury goods has both functional and aesthetic aspect to it 2 2 Targeting Tesla will take on the three automobile giants Audi BMW and Mercedes Benz on entering Indian luxury car segment It is best to follow the tried and tested targeting pattern left by the Germans rather than spend the relatively smaller budget available on targeting multi segments of the upper strata Indian community which is spread widely across 27 states 2 2 1 Targeting Strategy Concentrated targeting Tesla has to target a very defined and specific segment in the market i e the high income discerning customers This strategy is effective for small companies like Tesla with limited resources It is especially useful as the competitors are much bigger players like the German auto manufacturers In appendix 7 we have analysed that for a company like Tesla marketing the Model S a niche segment it is advisable to target the Metros with high purchasing capacity There are two main reasons for targeting this segment Firstly the success of existing luxury car manufacturers in targeting this segment The Luxury car segment is growing at a rate of more than 20 annually Secondly in a vast multi cultural country like India segmenting the high income consumers by occupation will result in a consumer category spread non uniformly across the different states Lastly each 9 state in India has separate governance and registration hence it is important to maintain presence in the top states initially itself These Metro cities are to be divided in to 3 tiers with considerations given to a geographical spread Hence from the analysing different parameters on the metros Tier 1 Phase 1 will target setting up showrooms and service stations from Mumbai Delhi Bengaluru Chennai Cochin Tier 2 Phase 2 will target setting up showrooms and service stations from Kolkata Hyderabad Ahmedabad Pune Surat However the metros to be included in the 3rd phase is not to be predefined The sales figures from Phase 1 and Phase 2 have to analyse to strategically form phase 3 expansion plans Phase 1 and Phase 2 will give a very strong skeletal system for uniform future expansion across India After establishing a presence in the metros the psychographic segments mentioned in 2 1 3 are to be targeted in each city These psychographic segments of consumers are present in all metros and have a general tendency towards discerning luxury products 10 2 3 Positioning Positioning happens in the mind of the consumer Tesla has to create a new category and launch the Model S in that category What Tesla has to do here is follow the segmentation and targeting patterns done by the Germans and Position the product the entirely different Tesla has to Create a category called Green Luxury Launch the Model S in that particular category Sponsor Go Green projects events clubs and organizations Identify Multi national corporations supporting sustainable development and green technology Offer promotional vehicles to the top executives like CEO CFO Massive campaigns on No Fossil Fuel No Pollution Drive Tesla 3 Marketing Objective Marketing objective of Tesla has to be clear concise and impact setting The highlight should be on the fact that Tesla Model S is the best sedan on the planet If challenged it should be clearly justified by supporting features such as Only fully electric sedan in India Fastest Sedan in India 0 100kmph in 5 secs Only 5 adult 2 children seater sedan in India Indian customers are very discerning and appreciated informative marketing techniques They research on their products thoroughly before making a decision Hence the marketing objective should be to covert sales by Provide sustainable luxury without comprising performance 11 Audi BMW and Mercedes followed by Jaguar Volvo and others rule the current Indian luxury car market From appendix 8 analysing the market shares it can be understood that JLR and Volvo without local manufacturing have managed to grab a market share of 9 6 and 3 02 in a fraction of 3 years from market entry In the initial phase phase 1 Tesla will set up 5 showrooms in the five Tier 1 cities the objectives are 1st year should be divided into 4 quarters o1st quarter sales should be aimed at 2 cars dealer month o2nd quarter sales should be aimed at 3 cars dealer month o3rd quarter sales should be aimed at 4 cars dealer month o4th quarter sales should be aimed at 5 cars dealer month 2nd year should focus in maintaining 5 cars dealer month translating to 300 cars year around 1 market share 3rd and 4th year should aim at reaching 2 market share 3 market share should be the target for phase 2 expansions The analysis of this marketing strategy is in appendix 9 4 Marketing Mix Strategies Marketing mix strategies include product Audi BMW and Mercedes followed by Jaguar Land Rover and Volvo The intra segment rivalry will be intense if Tesla is marketed as a Luxury car Hence it is advised to create a new category called Green Luxury and lead the segment with no competition in the near future New Entrants Fully electric luxury cars are non existent in Indian automobile market at the moment The entry barrier for the segment is very high owing to the high research and development costs Hence the threat on new entrants is low Substitute Products Tesla full electric luxury sedan itself is a substitute to all the current luxury cars running on petrol and diesel To take advantage of this low running costs and pollution free transportation feature of Tesla should be widely popularized Other substitute includes METRO rail transport Bus public transport etc Tesla is aiming at high income category In this category in India consumers buy cars for transportation in luxury status success symbol and performance indulgence Hence has a very negligible chance for choosing substitute modes of transportation Buyer Bargaining Power In Luxury car segment buyers have high bargaining power due to large number of alternatives available Hence if Tesla is positioned in the Green Luxury segment buyers bargaining power will be much lesser Supplier Bargaining Power Very low since Tesla will be brought into India as a completely built unit CBU But this will be a higher threat after Tesla sets up a manufacturing plant or assembly plant for Completely knocked down cars in the future Appendix 2 22 SWOT Analysis for Model S Entering India Luxury Car Market STRENGTHS Luxury car segment rising at 20 per year Forecasted to rise to 168 by 2018 The Indian upper class A1 has rising tendency to invest in luxury cars Government provides monetary assistance for manufacturing units Rising petrol and diesel prices Government assistance on Hybrid and electric cars WEAKNESS German competitors are well established Creating brand awareness is not easy as it is a very vast country having more than 25 cultures Import duties of CBU completely Built cars are very high Duties CKD completely knocked down are relatively cheaper OPPORTUNITIES First of the new segment green luxury First fully practical electric luxury performance sedan Setting up manufacturing facility is relatively inexpensive This can act as hub for supplying to other Asian countries Will get benefits from future government policies on CO2 emission savings THREATS Bad road conditions can cause increased maintenance intervals Setting up superchargers may not be viable owing to the initial sales forecasts Introduction of hybrids from German rivals 23 Appendix 3 Top 10 cities by GDP RankCityState PPP GDP USD 1MumbaiMaharashtra 209 billion 2DelhiCapital state 167 billion 3KolkataWest Bengal 150 billion 4BengaluruKarnataka 83 billion 5Hyderabad Andra Pradesh 74 billion 6ChennaiTamil Nadu 66 billion 7AhmedabadGujarat 64 billion 8PuneMaharashtra 48 billion 9SuratGujarat 40 billion 10Vishakapattanam Andra Pradesh 26 billion 24 Appendix 4 Top cities by luxury car sales BMW Mercedes Benz and Audi RankCityState Luxury Car Sales 2012 1MumbaiMaharashtra6250 2DelhiCapital state5345 3KolkataWest Bengal3240 4BengaluruKarnataka3199 5PuneMaharashtra3055 6ChennaiTamil Nadu2950 7LudhianaPunjab2560 8CochinKerala1800 9HyderabadAndra Pradesh1700 25 Appendix 5 Top paying jobs in India 2013 Chakreview 2014 No JobAnnual Pay in million INR per annum 1IT Professionals0 8 1 9 2Chartered Accountant1 8 2 4 3Investment Bankers1 4 4CEO CFO2 3 4 5Doctors0 6 1 2 26 Appendix 6 Occupation of Audi buyers 2012 RankOccupationPercentage of Sales 2012 1Business 41 2Doctors24 3Investment Bankers13 4Architects9 5Real Estate Developers7 6Other 6 Business includes owners of construction companies manufacturing companies Jewelers Diamond Merchants Distillers and Retailers Includes NRI Non resident Indians IT professionals Accountants Lawyers Engineers and Heirs 27 Appendix 7 Targeting Viability Study on chosen consumer segments Segment Metros in terms of wealth Measurable The purchasing capacity of the consumers in the short listed metros can be measured from statistics from government reports and other agencies The purchasing capacity and disposable income available in these metros is well evident from the city wise luxury car sales statistics Substantial The chosen metros are large enough in terms