Product Overview

Tesla Model Y is an electric SUV introduced in 2019. The base model is powered by an electric motor and has a range of 545 km under the CLTC standard. The 2022 base model accelerates from 0 to 100 km/h in 6.9 seconds. It comes with the standard Autopilot system, which allows the vehicle to perform lane-keeping and cruise control. The Model Y is rated 5-star for safety by Euro NCAP. Besides these specifications, its minimalist interior design and the front trunk provide ample space. A single 15-inch large screen is also another highlight of this vehicle.

Marketing Strategy

According to Tesla’s 10-K annual report (2023), the company’s primary marketing strategy is media coverage and word of mouth. Tesla claims that it doesn’t rely on traditional advertisements and has relatively low marketing costs.

Key Consumer Value & Means-End-Chain

One of the key consumer values of Model Y is environmental responsibility. Since the vehicle uses electric power, the functional consequences are that it reduces carbon emissions and environmental impact compared to traditional gas vehicles. Then, consumers feel that they are making a positive impact on the planet, thus fulfilling their value of environmental responsibility.

On the Tesla impact website, Tesla (2023) states that its mission is to accelerate the world’s transition to sustainable energy. Tesla also releases a sustainability report annually, which details the company’s progress toward its sustainability goals, including reducing emissions, increasing energy efficiency, and promoting the use of clean energy.

Besides its website, Twitter is a large platform for marketing. Elon Musk tweeted on Feb 1, 2023, a concept image of the Giga Nevada Factory. Solar panels fully cover the vast plant on the roof. He also states that the factory will be fully solar-powered in the future.

Tesla takes a step further and tells its customers being eco-friendly offers more than just a sense of doing good for the environment. For example, on Model Y’s website, Tesla listed “price after gas savings” next to its official price. The price after savings is calculated based on a gas price of ¥8 per liter and an electricity price of ¥0.5 per kWh. After 100,000 km of driving, it will save ¥71,400.

Another example is when introducing the vehicle’s interior materials. Tesla claims that its “All Vegan Interior” is more comfortable, durable, and stain resistant than leather.

Consumer Goal Hierarchies

According to Huffman et al. (2000), there are six levels of consumer goals in the hierarchical model, and they can be further categorized into three categories: being, doing, and having. Being goals are abstract high-level goals consisting of consumer’s terminal goals and life projects; Doing goals are things that need to be done soon; Having goals, on the other hand, are low-level goals on consequences of owning and objective metrics of the product.

Different levels of goals influence each other. There are three types of influence: Incorporation, abstraction, and adaptation.

Incorporation is when higher-level goals shape low-level goals. For example, a customer in China might label themselves as patriotic and thus would not purchase an American vehicle. In this case, Tesla could shift their marketing effort from sustainability to acknowledging this type of customer that all Model Y sold in China are produced in China. By reducing the differences between life themes and values (high-level) with feature preferences (low-level), this type of consumer will find themselves more acceptable to Model Y. Higher-level goals will also change when a person enters different stages of life. For students and unmarried customers, sales should highlight the speed of Model Y, while for married ones, the focus should be on the vehicle’s safety.

For customers who have specific lower-level goals like seeking a car that is stylish, fast, and long-range, Tesla can use the bottom-up abstraction strategy called abstraction to sensitize or create their high-level goals. Tesla could use social media influencers to create a fashionable and trendy brand image. Customers might be able to align the benefits sought with their values of being a fashion guy. Tesla could also focus on their price. Other cars that can accelerate from 0-100km within 4 seconds might cost over a million Yuan. By positioning their vehicles as a smart financial investment, Tesla can appeal to customers who are looking to build wealth through careful money management.

Sometimes goals are influenced by external factors depending on the context, also known as adaptation. Some customers originally wanted to buy a sporty muscle car. However, for instance, he must go to work in Hangzhou. Hangzhou imposed a traffic restriction on gas vehicles based on the last digit of license plate numbers. To get a Hangzhou plate, people will also need to work in Hangzhou for two years and then enter the license-plate lottery. All non-Hangzhou plates are not allowed during peak hours. In this case, customers’ higher goals are not as important as solving contextual issues. Tesla’s marketing team can let these customers know that it is easy for them to get a Hangzhou green plate if they purchase a Model Y instead of a gas vehicle.

Compared to the Means-End Chain model, Huffman et al.’s hierarchical model involve goal-determination processes. The most obvious difference is that the Means-End Chain model has a large gap between product knowledge and self-knowledge. Model Y can have a green plate installed does not necessarily associate with one’s life value of being successful. The customer might have a mid-level goal like getting a car that allows him to work in Hangzhou, and by working in a big city, he might become a successful businessman. The MEC model also neglects goal conflict. When a customer has benefits sought of being both affordable and luxurious, the customer needs to adjust the relative importance of the conflicting ones.

However, different customers have different values and goals. Getting a tailored analysis of each customer is time-consuming and requires a significant effort. It might also be too rigid to limit the creativity of marketing and thus be less adaptable to understanding customer preferences.

Classical Conditioning & Operant Conditioning

Classical conditioning involves pairing a neutral stimulus with an unconditioned stimulus. The previous neutral one will have a similar response to the unconditioned one. This could be useful when doing marketing. By pairing the Model Y with positive stimuli, such as high-status celebrities and luxury lifestyles, the car can be associated with these positive experiences in the minds of consumers. For example, A Youtuber named ZHC made the video “I Surprised MrBeast With A Custom Tesla!” and this video reached 57 million views. In this video, ZHC painted the car with a tiger and MrBeast’s logo on it. It associates values like creativity, freedom, and luxury with the Tesla car. Next time viewers of the video see a Tesla, it will remind them that Tesla is for cool people.

Operant conditioning is a type of learning in which behavior is modified by the consequences it produces. Tesla uses positive reinforcement where when people refer their friends to buy a tesla car, they can get 3,500 loyalty credits in return, which is equivalent to 750 km of supercharging; when they re-purchase a Tesla, they can get 7,000 credits. Tesla also has employees at DMV assisting drivers with registration processes. This is negative reinforcement since it removes obstacles for customers and thus will increase the possibility of referring Tesla to their friends.

These both can produce positive effects on customers. For example, classical conditioning could be used to associate Model Y with desirable emotions and experiences, while operant conditioning could be used to reinforce desired behaviors related to the product. They are not mutually exclusive and can be used together in a marketing campaign to create a more significant impact.

However, if I have to choose one to prioritize, I believe Tesla should focus more on classical conditioning. Operant conditioning influences the consequences it produces. This includes the referral program mentioned above, easier registration, or giving discounts. In the end, these activities are based on customers decided to buy a Model Y. If customers were not aware of the new car manufacture or had negative opinions towards the brand, then they would never take Model Y as consideration in the first place. On the other hand, operant conditioning are easy to be copied by peers. If all car manufacturers decided to give discounts, it would be a lose-lose situation. The priority is to attract people to consider Model Y. Then, things like referral or registration can be negotiated later, and these are much easier to do. Tesla heavily relies on social media and word of mouth, and classical conditioning is also more time-consuming.

New Model

Another model that can be applied to improve marketing is the social identity theory. It proposes that individuals form their identities based on their social groups. Tesla can tailor their marketing efforts to align with the values and beliefs of different social groups.

For environmentally conscious consumers, the company should emphasize aspects like fewer carbon emissions and renewable energy sources. In China, Tesla has not been actively promoting their solar panels and Powerwall. Some might be concerned because most electricity is generated by burning coal and natural gas. If Tesla offers discounts on solar panels and Powerwall by the time consumers purchase a Tesla vehicle, that might be helpful for Tesla to generate more revenues.

Tesla-made vehicles are also attractive to tech-savvy consumers because all four models are capable of autonomous driving. Model Y also has a 15-inch large screen which allows consumers to browse the internet, watch videos, and even play video games on it. However, for consumers who purchased a Model Y before 2022, the vehicle is equipped with an Intel chip which is less powerful for gaming. If Tesla offers a service to upgrade the processor, that would be great news for the tech group.

In addition, Model Y’s large internal space might attract people who like camping and traveling. The backseat of the vehicle can be laid down and turned into a bed. Customers just need to bring a foldable mattress and a bed sheet to go out and camp. Tesla also developed Camp Mode. According to Jorge Aguirre (2022), when entering Camp Mode, the vehicle will maintain the optimum temperature and airflow and play chill music. There is still some space for improvement. If the customers sleep in the vehicle overnight, they might worry about charging their laptops. Tesla could offer a power inverter that changes DC power from the 12V outlet into 220V AC power. By doing this, people will be more willing to buy this car since it removes obstacles for them to camp. It is also an act of positive punishment.

Summary

In this report, I compared several marketing models. After analyzing different models, the most important thing for marketing is to understand what consumers really need. Tesla should first gather information and understand consumers since all models are based on the understanding of consumer needs.

Reference List

Tesla, Inc (2022) FORM 10-K. Available at: https://www.sec.gov/Archives/edgar/data/1318605/000095017023001409/tsla-20221231.htm (Accessed: February 8, 2023).

Tesla, Inc (2023) Tesla Impact. Available at: https://www.tesla.com/impact (Accessed: February 8, 2023).

Musk, E. (2023) What the Tesla Giga Nevada factory will look like when finished, Twitter. Available at: https://twitter.com/elonmusk/status/1620498352214532096?s=20&t=NBL-R2n7MzMsRTO6M6Q5Aw (Accessed: February 8, 2023).

Huffman, C., Ratneshwar, S. and Mick, D.G. (2000) “Consumer goal structures and goal-determination processes,” in The Why of Consumption. Routledge, pp. 8–30.

ZHC (2020) I surprised mrbeast with a custom tesla!, YouTube. Available at: https://youtu.be/eJrSE1AhdDU (Accessed: February 8, 2023).

Aguirre, J. (2022) Tesla’s camp mode: A comprehensive guide, Not a Tesla App. Available at: https://www.notateslaapp.com/tesla-reference/830/tesla-camp-mode-a-comprehensive-guide (Accessed: February 8, 2023).