Chat with us, powered by LiveChat Tesla Inc in Indonesia Customer Satisfaction Marketing Plan Assignment | Abc Paper
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1. Fill out the customer satisfaction section on the balanced score card… some recommendations would be:- On Time Delivery- Quality Initiatives- Turn Around Time for Service- Response time- Customer Satisfaction
2.The Balanced Scorecard (section 18 ) should flow logically from, and reflect the key components of, your business plan strategy. and must be explained in text.
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MARKETING PLAN
Marketing Plan:
Tesla Inc. in Indonesia
MARKETING PLAN
Executive Summary
Tesla, Inc. which was formerly known as Tesla Motors was founded in the year 2003
and only started being profitable in 2013. It is based on Palo Alto, California and specializes in
solar panel manufacturing, lithium-ion battery energy, and electric vehicles (Tesla, Inc., 2019).
Tesla is an independent company and automaker which aims to provide affordable electric
vehicles to average consumers (Tesla, Inc., 2019). The future of the automotive industry is in
hybrid and fully electric vehicles. According to a report by the Boston Consulting Group (2017),
a combination of hybrid and fully electric powertrains is expected to cut the global market share
of pure internal combustion engines by about 50% by 2030. The Global Auto Report (2018)
states that global auto sales have expanded by 4.6% in May 2018, bringing the total growth rate
to 3.4%. The growth in sales in 2018 has been led by strong gains in developing economies
while a number of advanced economies have reached sales plateau.
Current trends such as the growing support by governments for environmentally friendly
vehicles and increasing concern about climate change, the rising number of electric vehicle
manufacturers and charging stations, all suggest that electric cars are the future of the automotive
industry. In order for Tesla to maintain its position as a top competitor in its industry they must
be able to expand internationally. It is a necessary strategic move for Tesla to expand in order to
achieve its mission of accelerating the world’s transition to sustainable energy, they must operate
in all parts of the world, not only in select countries. After analyzing data on several countries
using the PESTEL framework of political, economic, sociocultural, technological, environmental
and legal factors and identifying the threats and opportunities of each factor, the recommendation
was made to enter into the Indonesian market. Taking into consideration several rounds of
research and a market analysis to determine the economic market opportunity and potential
MARKETING PLAN
growth of Indonesia it was recommended to enter the country with differentiation and focus cost
leadership strategies. In order to capitalize on these strategies, it was further recommended after
evaluation of several potential entry strategies that Tesla use foreign direct investment strategies
and alliances as their entry vehicle with a multidivisional organizational strategy that allows
them to act quickly, serve customer needs, and encourage specialization amongst key team
players (Schmitz, 2012). The total cost of this multidivisional organization structure varies
slightly by year as the expansion progresses, the total for the startup through year five is
estimated to cost around $10 million dollars. Other operational costs related with the
supercharging stations, store and galleries, and Gigafactory were quantified in order for Tesla to
have an accurate sense of all the cost associated with operating in Indonesia. The five-year Tesla
expansion into Indonesia will require at least $5.06 billion dollars for operational expenses.
However, these operational costs do not include the cost of marketing required to build the
Indonesian consumer base.
This report analyzed and summarized the varying cost associated with expansion into
Indonesia in terms of the marketing mix strategies. It is determined, based on the expected
market share in Indonesia, as well as the pricing strategies presented the production, promotion
and placements costs will require an investment of $2.5 billion over the course of the five-year
expansion plan. This includes startup costs of $85,000 and year one marketing and personnel
costs of $177.7 million dollars. It should be noted that the costs of production and distribution
will significantly decrease after year fives due to the Gigafactory expansion as well as costs
associated with advertising once Tesla achieves firm brand recognition in Jakarta, Surabaya, and
Bandung.
MARKETING PLAN
Table of Contents
Introduction ………………………………………………………………………………………………………………….. 1
Company Profile …………………………………………………………………………………………………………. 1
Product and Services ……………………………………………………………………………………………………. 2
Country of Entry …………………………………………………………………………………………………………. 3
Market Size and Segmentation ………………………………………………………………………………………. 4
Market Share ………………………………………………………………………………………………………………… 5
Expected Market Share …………………………………………………………………………………………………. 6
Pricing ………………………………………………………………………………………………………………………….. 6
Product …………………………………………………………………………………………………………………………. 9
Promotion …………………………………………………………………………………………………………………… 11
Placement (Distribution) ……………………………………………………………………………………………… 13
Marketing Cost Summary ……………………………………………………………………………………………. 16
References …………………………………………………………………………………………………………………… 19
MARKETING PLAN
1
Introduction
The future of the automotive industry is in hybrid and fully electric vehicles. According
to a report by the Boston Consulting Group (2017), a combination of hybrid and fully electric
powertrains is expected to cut the global market share of pure internal combustion engines by
about 50% by 2030. The Global Auto Report (2018), states that global auto sales have expanded
by 4.6% in May 2018, bringing the total growth rate to 3.4%. The growth in sales in 2018 has
been led by strong gains in developing economies. The global economy remains strong amid a
mutually reinforcing expansion brought about by rising trade flows across the world (Herrera J.
M., 2018). Due to the growth of this niche market, opportunities for organizations to capitalize
remain positive. With new entrants into the electric vehicle market the competitive environment
is starting to become fragmented, and emerging markets such as Indonesia present significant
opportunities for growth.
The purpose of this report is to provide our client company Tesla, Inc., with a
comprehensive marketing plan that gives them a play book of how, when, and where to reach
their target buyers. This playbook is focused on Tesla not only winning market share, but also
positioning them to generate healthy revenue growth for years to come. Tactics in this marketing
plan will incorporate elements from strategic objectives, as well as capitalize on the
organizational design established for Tesla.
Company Profile
Tesla, Inc. is an exciting and steadily growing technological organization that was
founded on the premise of accelerating the world’s transition to sustainable energy through
transportation (Tesla, Inc., 2019). Tesla, Inc. was established in 2003 by Silicon Valley engineers
and is headquartered in Palo Alto, CA with currently more than 48,000 employees (Statista,
MARKETING PLAN
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2019). Going public in 2010, Tesla is currently traded on the NASDAQ under TSLA and is
looking to change the automotive industry with its innovation and drive towards environmentally
friendly zero emissions vehicles. CEO Elon Musk is the mastermind and spokesperson behind
Tesla’s current success, drumming up interest with his commitment to building the best electric
vehicles (EV) and electric powertrains in the world. With a focus on designing and
manufacturing advanced electric vehicles with zero emissions, they look to employ and develop
talent from around the globe (Tesla, Inc., 2019). The company currently holds 45 percent of the
U.S. market and 7 percent of the global market, falling into the top five positions with all three of
its current model cars (Shahan, 2019).
Product and Services
Tesla will enter the Indonesian market with several supercharging stations in and around
Jakarta to lay the groundwork for their infrastructure. This is to then be followed by a Store and
Gallery in a high foot traffic area in
Price
Jakarta that can lure in eco-friendly
$200,000.00
buyers. As of December 2018, Tesla
$150,000.00
produces four models of fully electric
$100,000.00
vehicles, which include the Model 3,
$50,000.00
Model S, Model X, and Roadster with
prices ranging from $42,900 to
$Model 3
Model S
Model X
Roadster
$200,000 (Hearst Magazine, 2019). As well as the newly announced Model Y which will start
production in 2020 that is a compact crossover that will have a price tag of about 10 percent
more than the current Model 3 (Hearst Magazine, 2019).
MARKETING PLAN
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Country of Entry
After analyzing data on several countries using the PESTEL framework of political,
economic, sociocultural, technological, environmental and legal factors and identifying the
threats and opportunities of each factor, the recommendation was made to enter into the
Indonesian market. There were a number of key findings that gave Indonesia the edge over other
potential market expansions. First, Indonesia has experienced significant growth in its GDP over
the last five years. According to the Global Business Guide, “Indonesia now finds itself at a key
point in its transition from that of a low income to middle income economy and from primary
producer to a value added exporter as well as knowledge based economy” (GBG Indonesia,
2019). Indonesia’s overall consumer market is growing and continues to grow at an
unprecedented rate with 66 percent of their population in the target age demographic of Tesla
buyers (Bertelsmann Stiftung, 2018).
Secondly, Indonesia’s political environment represents opportunity in all aspects,
including being a member of the ASEAN, G20, and the Electric Vehicle Initiative. This makes
foreign-trade complexities less of a burden on Tesla as well as mitigating overall international
taxation policies. The government has thrown its weight behind green vehicles in an effort to
reduce the country’s reliance on imports of fossil fuels, instead tapping into its abundant nickel
reserves, a key material for making lithium-ion batteries (Soeriaatmadja, 2019). Indonesia is
already a large manufacturer of vehicles and they display an optimistic future in the automotive
industry. Indonesia is working towards finalizing a new electric vehicle policy that will offer
foreign automakers incentives, as they rise to become the hub for lithium battery production
(Silviana & Potkin, 2019). Incentives include tax cuts to electric vehicle automakers and
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producers and favored tariff agreements with other countries that have high demand for electric
vehicles (Silviana & Potkin, 2019).
Market Size and Segmentation
Indonesia’s total population is 268 million, of that population there consists 65.5 million
households and is estimated to grow to over 68 million by 2021 (Statista, 2019). The country is
also the second-largest car manufacturing nation in Southeast Asia and the ASEAN region
producing 1.2 million units in 2018 (Indonesia Investments, 2018). In terms of market size, the
country currently dominates the market share in term of automobiles purchases in Asia and
ASEAN, selling 1.1 million units in 2018 (Indonesia Investments, 2018). Indonesia’s overall
consumer market is growing and continues to grow at an unprecedented rate, with 66 percent of
their population falling within the target age demographic of Tesla buyers (Bertelsmann Stiftung,
2018). Its young and expanding population and the rapid urbanization are key factors of the rise
in incomes and the ability of consumers to increasingly spend on discretionary and luxury items
(Banco Santander, S.A, 2019).
Market segmentation for electric vehicles could have been derived in way that targets the
complete market share of automobiles in Indonesia, however that would be counterintuitive as
this is an emerging market. Therefore, presumptions were made based on 65.5 million household
and of those households who owns cars (4%); and further segmented to the percentage of people
that fall within Tesla target buyer (8%); as well as who will be buying new cars (4%); and those
that will be buying secondary cars (1%). The target buyer of Tesla can then be segmented into
two categories; demographics and psychographics. Their primary target market is aimed towards
the upper and middle class with an age range from thirty to sixty years old and a household
income of $80,000+ a year. Psychographics for the primary target market include; concerns
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about gas consumption, economic value in a car, and the desire for an affordable luxury car with
a high safety value (Tesla Motors, 2019). The secondary target market is aimed towards college
students aging from eighteen to twenty-four with dispensable income. The psychographics for
the secondary target market includes consumers who are well educated and have goals to be
professionals (Tesla Motors, 2019). Using this information, we can further break down the
expected market share of electric vehicle purchases in Indonesia based on Tesla’s available
product lines and target buyer’s ability and likelihood to purchase the vehicle. Additionally,
Tesla will use geographic segmentation when entering into Indonesia. The targeted geographic
region would be Asia, specifically Indonesia, and the density would be urban and rural areas
within Indonesia.
Market Share
Indonesia has the largest economy in
Southeast Asia and is considered one of the most
important emerging market economies in the world
(Bertelsmann Stiftung, 2018). The global market of
electric vehicles is still at its beginning stages of
development; however, it is poised to reform
industries and communities across the globe (The
Boston Consulting Group, 2017). In 2016, global
stock of electric vehicles reached 2 million units after
crossing the threshold of 1 million units in 2015
Model
Tesla Model 3
BAIC EC-Series
Nissan Leaf
Tesla Model S
Tesla Model X
BYD Qin
JAC iEV E/S
BYD e5
Toyato Prius Prime
Mitsubishi Outlander
Renault Zoe
BMW 530e
Chery eQ EV
BYD Song
BAIC EU-Series
BYD Tang
BYD Yuan EV
BMW i3
Roewe Ei6
BAIC EX-Series
Others
Total PEV Market
Total EV Market
Tesla Total PEV Market Share
Tesla Total EV Market Share
Yellow = Plug-in Hybrid
2018
145,846
90,637
87,149
50,045
49,349
47,452
46,586
46,251
45,686
41,888
40,313
40,260
39,734
39,318
37,343
37,148
35,699
34,829
33,347
32,810
996,557
2,018,247
1,733,148
245,240
245,240
PEV Market Share
7%
4%
4%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
49%
100%
86%
12%
14%
(International Energy Agency, 2018). The adoption of electric vehicles is motivated by several
factors, including strong technological progress in battery technology, cost reductions, purchase
MARKETING PLAN
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incentives, supportive governmental policies and advanced charging infrastructure availability
(International Energy Agency, 2018). Until recently, very few electric vehicle models, 100%
electric vehicles sold in big volumes around the world. In 2018, from the 2 million PEVs sold
last year, 1.73 million were EVs, the rest being plug-in electric hybrid vehicles (Mihaltianu,
2018). Tesla clearly dominated the EV market in 2018, currently, Tesla holds 14% percent of the
global market, falling into the top five positions with all three of its current model cars (Shahan,
2019).
Expected Market Share
Based on the information above and with the knowledge that Indonesia plans to increase
the number of EV’s produced to at least 20% by 2025, we can forecast the expected market share
over the next three to five years in Indonesia.
Household in Indonesia
Households that fall within Tesla Target Market
EV Production in Indonesia (at least 20% by 2025)
EV Sales in Indonesia
Potential Tesla Market Share of Sales based on
global share of market
Model 3
Modle X
Model S
Roadster
Total Tesla Models Being Sold
Target
Segment
Price
80%
$ 35,000
15%
$ 82,000
4%
$ 86,000
1%
$ 200,000
2020
3,920
735
196
49
4,900
2,620,000
234,554
2020
42,000
38,500
2021
84,000
77,000
2022
126,000
115,500
2023
168,000
154,000
2024
210,000
192,500
9,800
14,700
19,600
24,500
4,900
2021
7,840
1,470
392
98
9,800
2022
11,760
2,205
588
147
14,700
2023
15,680
2,940
784
196
19,600
2024
19,600
3,675
980
245
24,500
Total
Units
58,800
11,025
2,940
735
73,500
Total Sales Per
Unit
$ 2,057,988,240
$ 904,044,834
$ 252,838,555
$ 146,999,160
$ 3,361,870,789
Pricing
The purpose of this section is to explore the pricing strategies that will be adopted by
Tesla as it enters the Indonesian market. Two pricing strategies will be explored the high-priced
luxury leader and the low-price leader. An exploration of how the pricing strategy will support
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market entry will be provided in addition to specifying the recommended sales price in the
following sections.
Pricing strategy
Tesla has different electric vehicle models that will be sold in Indonesia that are Model 3,
Model X, Model S and Roadster each with different features and prices identifying the need of
having two different pricing strategies to cater to the different models sold. The pricing strategy
that would be suitable for Tesla as it enters into the Indonesian market is the low-price leader and
the high-priced luxury leader (Schindler, 2012). The low-price leadership would involve
lowering the prices of Tesla’s vehicle models below the price set by competitors in the market.
Since 80% of the markets are middle class earners then the low-price leadership strategy would
be the most effective in capturing the market and growing market share (Tesla Motors, 2019).
Tesla will work with the Indonesian government to lower taxes on electric cars therefore further
supporting the low-price strategy the company will adopt as it enters the market. The high-priced
luxury leader strategy aims at creating the highest brand value and pricing power (Schindler,
2012). Luxury is not comparative and therefore the high-price luxury leader will be critical to
selling Tesla electric vehicles to the high-end consumers in the market. The high-priced luxury
leadership strategy will be used with the Tesla Roadster to target the 1% of the market. The
reason for adopting the high-priced luxury strategy for the Roadster is that it embodied
exclusivity, craftsmanship, and innovation.
How the Pricing Strategy Supports Tesla’s Expansion
The low-price leadership and the high-priced luxury leader strategy will be effective in
supporting the entry strategy of Tesla as it will enhance competitive positioning within the
Indonesian market. Positioning, as noted by Schindler (2012), is the difference that creates the
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preferences for a given brand. Therefore, the adoption of the low-price leadership strategy would
therefore enhance a preference for Tesla’s electric vehicles. In the world of business Schindler
(2012) argued that new companies entering a new market need to ensure that they provide
offerings that capture the attention of the market and the low-cost leadership strategy is effective
when dealing with cost sensitive markets. The pricing strategy especial …
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