Executive summary
Tesla is an example of a company that is able to disrupt an industry. Before Tesla, the fully electric car was an idea in the research and development laboratories of gasoline-powered cars. After Tesla, the fully electric car is almost synonymous with the name of the company. The technologies behind the car are still expensive and this means that it is still a niche product. However, Tesla is working towards making it a more mainstream car. This paper looks at the efforts of Tesla to get its Model S into the Singaporean market. This paper begins with an introduction of the product, which is the Model S, and the target market, which is the Singaporean market. A customer analysis is done including segments, economic factors, brand prominence, and perception, demographics. A market analysis is then done in order to determine the best approach in introducing the Model S into the Singapore market.
Introduction
The Tesla Model S is a fully electric full size luxury sedan. Tesla Motors based in Silicon Valley manufacture the vehicle. The company plans to introduce the vehicle into the Singapore market. Singapore has a total population of just over 5.5 million people (Department of Statistics, Ministry of Trade and Industry, Republic of Singapore, 2010). The median income of the population is US$ 82,000, which is the third highest in the world. This paper will analyze the product and the market and determine the suitability of the product to the market. The paper will also analyze the marketing strategy that is best suitable for the company to penetrate this market. The Singaporean market is unique due to its high buying capacity and small size. These two factors make it difficult to segment the market. In addition, a huge percentage of the population is comprise of foreign nationals or naturalized citizens.
Figure 1: Tesla Model S
Source: https://www.tesla.com/ModelS
Customer analysis
Singapore is a wealthy country of 5.5 million people. The GDP per capita PPP of the country is approximately $ 80,000, which ranks as third in the world (Trading Economics, 2016). The country is the 11th most densely populated country in the world. Despite this, the country’s high levels of wealth mean that it is a very good market for the luxury Tesla model S. the car starts at approximately US$121,000 similar to the price of the car in China /9Bloomberg News, 2014). This means that it is within the reach of a majority of the population in financial terms. The median age of the country is just below 40 years with almost 35% of the population comprising of foreign nationals (Department of Statistics, Ministry of Trade and Industry, Republic of Singapore, 2010). Because of the country’s relatively small population, it is difficult to divide the market. The median age is an indicator that the country is made up of roughly equal populations of young and old people. The country has a fertility rate of 0.8 live births per woman, which is well below the required fertility rate to replace the population (Department of Statistics, Ministry of Trade and Industry, Republic of Singapore, 2010). This means that the population would be skewed towards the aged. The government has mitigated this by encouraging foreign nationals to settle in the country.
The country has a very high per capita income. Naturally, the population would be skewed towards luxury offerings. The Tesla model S is a luxury vehicle that is well suited for the tastes of the Singaporean people. Customers in this market will choose products according to the quality delivered and value for money. Tesla as a company and the Model S as a vehicle provide this. The population of Singapore is very tech savvy. The country is among the global leaders in electronic development and the market is receptive of technological innovations that promise to make their lives easier. The population is also environmentally aware and the environment friendliness of a product will influence their buying decisions. The Model S meets all these requirements. The model is a very technologically advanced vehicle that is fully electric. It is also very well built and only costs a fraction of similar luxury vehicles in the market despite the use of expensive components such as its batteries (Tesla, 2016).
Tesla Motors is a relatively young brand when compared to other vehicle brands. Ford Motor Corporation has been in existence for over a hundred years. Compared to this, Tesla Motors was founded in 2003 and so has been in existence for just over a decade. Despite its relatively young age, Tesla has managed to disrupt the motor vehicle industry. When it was introduced, the objective of the company was to show that electric cars would perform like gasoline powered cars while at the same time being totally emission free. By doing so, the company has been able to create a very strong brand, which is well known the world over. The brand is held in high esteem across the globe and this includes the target Singaporean market. The Singaporean market is influenced by global trends. The good performance of the brand across the world has the possibility of influencing the local market. Overall, the Singapore market offers the typical customer targeted by the brand. This tech savvy customer is wealthy and environmentally conscious.
Targeting and positioning
The target market is the entire population of the country. As noted earlier, the market is too small to be effectively segmented. Before Tesla, fully electric vehicles were not considered mainstream. Researchers at leading corporations had experimented with electric powered vehicles for decades but production remained limited, mainly because of range anxiety. The entry of Tesla into the industry created a disruption. They were able to create a fully electric vehicle that had the range of a gasoline-powered car. This positioned the company in a market leading position in this segment of fully electric vehicles.
The Model S is the second brand by the company after the successfully Tesla Roadster that was used as a proof of concept. The Model S is a full size luxury sedan that can seat five people comfortably. It also has a range of a minimum of 230 miles on the base model, which takes care of range anxiety. The car can be marketed as a family car or as an executive vehicle. In the luxury vehicle segment, the car competes with other brands who price their vehicles way higher than the Model S. the vehicle will be positioned as the market leader in fully electric luxury vehicles. The Model S is able to live up to this by having technologically advanced features such as autopilot which is able to autonomously control the vehicle on highways.
Marketing strategy
The marketing strategy for the vehicle is the differentiation strategy. Unlike most vehicles, Tesla is offering the market a fully electric full sized luxury sedan. This implies that the company can concentrate on marketing the features of the vehicle in order to improve product penetration, as well as, consumer base (Lamb, Hair, & McDaniel, 2012). Therefore, the company aims to penetrate the Singapore market using this differentiation strategy. The company hopes to tap in to the technological awareness of the population as well as environmental consciousness. Currently, the Model S is almost non-existent in the Singaporean market. This is because of limited production capacities at the manufacturer. As such, the company has not been able to market the vehicle in every market. However, the company aims to get into the market and become the market leader in the fully electric full sized luxury sedan market. This will be relatively easy since there are not many manufacturers in this segment (Tracy, 2014).
The company aims to sell 5000 Model S vehicles in the first year of operation. This figure is attainable considering the demand for environmentally friendly vehicles in the target market. This figure will also enable the company to achieve a market leader position in the market. Despite the relatively low price of the Model S when compared to similar luxury vehicles, the Model S is still expensive compared to normal vehicles. Despite this, Tesla has mostly used the vehicle as a proof of concept vehicle. This means that the main aim of the company is not to make money out of the vehicle, rather to prove that it is possible to make the vehicle. This means that profits will not be part of the objectives.
The aim of the company is to increase the visibility of the brand over the coming years before the mass-produced Model X is made available to the public. This will be accomplished by slowly introducing the vehicle into the market as the company develops the infrastructure necessary to support the vehicles across the country. The marketing strategy is divided into periods of one year each. During the first year of operations, the company plans to sell 5000 vehicles in the city-state. The country is only 719 square kilometers, which means that it will be easy for Tesla to install the infrastructure required throughout the country. In the second year, sales are projected to double as the company also introduces the cheaper Model X into the market.
The product is positioned as a vehicle that is in a category of its own. The vehicle is fully electric powered. The batteries that power the electric motors are located on the floor pan of the passenger cabin (Tesla, 2016). This is an integral part of the design as it positions the heaviest components low giving the car a low center of gravity. This is important in the excellent handling properties of the car. It is offered as a luxury sedan that can be used in everyday driving. However, the car has a sports mode and a ludicrous mode, which are performance modes. In these modes, the car is able to offer performance equal to supercars, which are much lighter. Despite offering all this, the car is fully electric and so has zero emissions. Customers are therefore getting a very technologically advanced vehicle that can be used as an everyday vehicle but can also perform like a sports car while still having zero emissions.
The promotional strategy of the company is to push the vehicle as an environmentally friendly alternative to the other products in the market at no compromise on performance or luxury. This is very important since the company has to differentiate itself in the market (Tracy, 2014). For many years, many mainstream vehicle manufacturers have introduced hybrid engines. Although these are more efficient and economical than normal vehicles, they still possess an internal combustion engine. As such, they are not zero emission vehicles. On the contrary, the Model S is a fully electric vehicle with a range that is equal to the range of a normal combustion vehicle on a single tank of fuel. This is a very important strategy especially in trying to win over the environmentally aware customers in Singapore.
The vehicle is priced at roughly US$ 120,000. This price is subject to government subsidies, which can lower the price significantly. This is well below the price charged by manufacturers of similar luxury and performance vehicles. However, this price has intentionally been kept low in order to attract customers. The price is barely enough to cover production costs and as such, the company does not make profits from the sale of Model S vehicles. The company will sell its vehicles through its own showrooms. This will be a push strategy where the market will be introduced to a new product. However, demand is expected to rise once the car becomes available in the market due to the perception of the brand by the market.
Conclusion
The Tesla Model S is a product that is well suited for the Singaporean market. The Singaporean market is a tech savvy market that is also very wealthy. This helps the company as it offers a number of features that are attractive to the market. Up until now, the company has had little inroads into many markets because of production constraints. With production expected to grow rapidly in the coming years, the company is seeking new markets. The Model S is the best-selling fully electric vehicle of all time. It is also the first fully electric vehicle to top monthly sales of new vehicles in any country in the world, a feat it has achieved twice in Norway and once in Denmark. It is a disruptive vehicle that has performed well in all the markets it has been sold. If the company continues with the same strategy in Singapore, the model is expected to quickly meet and exceed the expectations of the company.
Reference List
Bloomberg News 2014. Tesla to Sell Model S Sedan in China from $121,000. Retrieved 7/30/2016 from http://www.bloomberg.com/news/articles/2014-01-23/tesla-to-sell-model-s-car-in-china-for-50-more-than-u-s-price
Lamb, C. W., Hair, J. F., & McDaniel, C. D. 2012. Essentials of marketing. Mason, Ohio: South-Western Cengage Learning.
Tesla 2016 Model S. Retrieved 7/30/2016 from https://www.tesla.com/ModelS
Tracy, B. 2014. Marketing. New York : American Management Association
Trading Economics 2016. Singapore GDP per capita PPP 1990-2016. Retrieved 7/30/2016 from http://www.tradingeconomics.com/singapore/gdp-per-capita-ppp
