Group_d12_tesla’s “$0 Marketing Budget”.docx

Marketing Report: Tesla’s “$0 Marketing Budget” A report submitted to Professor Arundhati Bhattacharya

In partial fulfilment of requirements of the course

Marketing Management

By

Group D12 Pranay Dhone (188179) Rahul Giri (188188) Sanjeev Mahach (188211) Vaibhav Verma (188263)

Section D On 06-08-2018

Tesla’s “$0 Marketing Budget” Marketing is often called “the art of selling a product” and is considered as one of the essential components for a company’s growth. Especially in B2C (business to consumer) segment, marketing is given high importance. Many B2C companies have a separate marketing department, which aims to promote its product via different marketing plans such as advertising, campaigns, PR activities, etc. Many companies have large marketing budget allocated to traditional and modern marketing techniques, creating a marketing balance. Marketing Balance Concept highlights the importance of incorporating the internet and digital efforts into marketing plans. Marketers must balance increased spending on search advertising and social media with increased spending on traditional marketing communication. In the example of reinventing marketing at Coca-Cola, it has shown that how the company has implemented the new way of marketing by adding a strong digital component to its traditional marketing tools. Tesla designs, develops, manufactures and sells high-performance fully electric vehicles. Historically, Tesla has been able to generate significant media coverage of their company and their vehicles, and they believe they will continue to do so in future as well. To date, for vehicle sales, media coverage and word of mouth have been the primary drivers of their sales leads and have helped them achieve sales without traditional advertising and at relatively low marketing costs. Tesla spends almost no money on conventional ad campaign; they let their customers do their marketing which is a brilliant advertising strategy. Tesla has crazy fan advocates who are actively present on social media platform discussing how to market Tesla better, adulating the car and even promoting it. Tesla allows its people to discuss its vehicles and be the catalyst for a brilliant marketing campaign. The company also organized “Project Loveday”, a contest for fan-made ads, at the suggestion of a fifth grader, which saw huge response and publicity.

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Tesla does not have plans to invest in marketing as well. Tesla motors has neither an advertising department, nor an advertising team, or a Chief Marketing Officer (CMO). According to a statement given by Alexis Georgeson, a PR person in Tesla, the stores are company’s medium for advertising. The company is confident of selling 20,000 plus cars without paying for advertising. Tesla has no plans to hire agencies or spend on advertising in the future. Tesla’s CEO Elon Musk believes that money that is to be spent on advertisement can be utilized for product development. However, the company and its CEO have a strong social media presence, which helps Tesla connect with the customer base. Musk understands the power of showmanship, and he is constantly involved in tonnes of interviews, cameos and media appearances. He uses Twitter to promote, celebrate and analyse the new product or development. Tesla takes a different approach to market itself. Recently, Tesla just pulled off one of the greatest marketing stunts ever- an orbiting car. Musk also pulled off a double marketing coup with the first successful test launch of his Falcon Heavy rocket, the flagship of his private space-flight company SpaceX, and the subsequent debut of its payload—a Tesla Roadster driven by a dummy nicknamed Starman—as the first car in space. This stunt captured the attention of the whole world, many marking it as marketing unlike they have ever seen before.

. Ground-breaking marketing technology and smart marketing have made Tesla very successful in recent years. Tesla captured 45% of the luxury car market by selling just 84000 cars in the FY2016. Today, Tesla has more order than they can build- that is a testimony in itself to its great advertising strategy. 2

References 1. Veersamy, V. (2016). Tesla’s “$0 Marketing Budget” is Awesome Marketing. Retrieved from https://www.referralcandy.com/blog/tesla/ 2. Zart, Nicholas (2014). The Brilliant Tesla Advertising Strategy, or Lack Thereof. Retrieved From https://www.teslarati.com/brilliant-tesla-advertising-strategy-lack-thereof/ 3. Mediakix Team (2017). 4 Charts showing how Tesla thrives with $0 advertising spend Retrieved from http://mediakix.com/2017/07/tesla-advertising-zero-spend-budget-charts/ 4. Griner, David (2018). With a $0 Ad Budget, Tesla Just Pulled Off One of the Greatest Marketing Stunts Ever. Retrieved from https://www.adweek.com/brand-marketing/with-a0-ad-budget-tesla-just-pulled-off-one-of-the-greatest-marketing-stunts-ever/

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