TeslaMotors

The Tesla Model TRX

Tanja Kuehni, Elisa Lokmagozian, Andrew Mirto, Erik Sharp

Bus 306-02December 8, 2013

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ContentsExecutive Summary.........................................................................................................................3

Situation Analysis............................................................................................................................4

Market Summary.............................................................................................................................4

Market Analysis...............................................................................................................................5

Demographics..............................................................................................................................5

Geographics.................................................................................................................................5

Psychographics.............................................................................................................................5

The Market.......................................................................................................................................6

Market Needs...........................................................................................................................6

Market Trends..........................................................................................................................7

Market Growth.........................................................................................................................8

SWOT Analysis...............................................................................................................................8

Strengths...................................................................................................................................8

Weaknesses..............................................................................................................................9

Opportunities............................................................................................................................9

Threats....................................................................................................................................10

Competition...................................................................................................................................11

Product Offering............................................................................................................................12

Keys to Success.............................................................................................................................13

Critical Issue..................................................................................................................................14

Marketing Strategy........................................................................................................................14

Value Proposition.......................................................................................................................14

Mission.......................................................................................................................................15

Marketing Objectives.....................................................................................................................15

Financial Objectives......................................................................................................................15

Target Markets...............................................................................................................................15

Demographics............................................................................................................................16

Household Income..................................................................................................................16

Gender....................................................................................................................................16

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Family Orientation.................................................................................................................16

Geographics...............................................................................................................................17

Outdoor Oriented Regions......................................................................................................17

Psychographics...........................................................................................................................17

Use of the Truck.....................................................................................................................17

Upper-Middle Class...............................................................................................................18

Positioning.....................................................................................................................................18

Strategies........................................................................................................................................19

Marketing Mix...............................................................................................................................19

Pricing........................................................................................................................................19

Distribution................................................................................................................................19

Marketing Communications.......................................................................................................20

Marketing Research.......................................................................................................................20

Financials.......................................................................................................................................21

Break-even Analysis..................................................................................................................21

Sales Forecast.............................................................................................................................24

Expense Forecast........................................................................................................................25

Controls..........................................................................................................................................26

Implementation..............................................................................................................................26

Marketing Organization.................................................................................................................27

Contingency Plan...........................................................................................................................28

References..................................................................................................................................29

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Figure 1: Survey…………………………………………………………………………...………9

Figure 2: Cost Breakdown 1…………………………………………..........................................24

Figure 3: Cost Breakdown 2…………………………………………..........................................25

Figure 4: Break-Even Analysis………………………………………..........................................26

Figure 5: Sales Forecast………………………………………………………………………….27

Figure 6: Fixed Expense Forecast……………………………………..........................................27

Figure 7: Variable Expense Forecast…………………………………………………………….28

Figure 8: Marketing Organization……………………………………………………………….29

List of Tables and Figures

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Executive SummaryResponding to the increasing demand for environmentally friendly and innovative

solutions in the car industry (Kuehni, et al., survey, October, 2013), TeslaMotors will introduce a

fully electric pickup truck, the Model TRX. By doing so, Tesla not only addresses the

environmental issues that pickup trucks contribute to, but also relieves customers of the

dependence on gasoline, a major portion of an individual’s expenses. The Model TRX will have

the same motor as the Model S P85, which is currently on the market, with a mileage range of

265, 416 horsepower and speed up to 130 MPH (Musk, n.d.).

           The main target market consists of males with an annual household income of at least

$135,000. According to a market survey, people in this income range perceive themselves as part

of the upper-middle class (Kuehni, et al., survey, October, 2013). Taking this into consideration,

the Model TRX will have a clean look and will be subtly luxurious, but it will not cost a lifetime

savings. The focus is rather on functionality and power, which speaks to the outdoor oriented

target market.

           The growing market for electric vehicles provides an ideal opportunity to introduce the

Model TRX. The main competitors are electric vehicle companies, luxury car companies and

pickup truck manufacturers. However, Tesla will benefit from the first mover advantage, by

being the first company to offer a fully electric pickup truck. As an established and reputable

company, Tesla can draw from experience. Therefore, Tesla will apply product line pricing.

Without the addition of special luxury features, the base price for the Model TRX is $75,000.

           Tesla’s Model TRX will be distributed in the highly promising U.S. market, due to the

popularity of pickup trucks in the U.S (Paukert, 2013). It will be sold to customers directly

through Tesla, at Tesla’s stores and galleries. The integrated marketing communication will

consist of advertising and public relations. Advertisements will be placed in television, web, and

selected magazines. Hosting the car at events and car shows will encourage positive press and

help spread the word about the product. The business-to-customer marketing will also strongly

rely on word of mouth referrals.

           Our marketing department includes the sales team, phone support, technicians, and PR

representatives. The sales force team will promote the Tesla brand and the new Model TRX,

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while the phone support team will be available to help place orders, set dates for regular

maintenance, and assist with general problems. Most importantly, the technicians will maintain

close customer relationships to ensure customer satisfaction and consumer value.  

           Based on the sales forecast of the Model S, the projected unit sales of the Model TRX can

be estimated at 2,700 in the first year. High customer satisfaction and referrals will result in an

exponential increase in sales, with 5,000 units in the second and 15,000 units in the third year.

With the average selling price of $80,000, Tesla will break-even by the end of the second quarter

of the second year.

           A strong focus on customer relationships will be a vital aspect in convincing customers of

the quality of the product, as well as, reacting to possible malfunctions or mishaps in the

production. An honest dialogue with the customers and superior customer services will maintain

a high level of trust and result in customer retention.

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Situation AnalysisThe car industry is criticized daily for the environmental damages produced by its

products. Furthermore, the cost to operate these products (gasoline and maintenance) is a rising

issue for consumers. TeslaMotors wishes to enter a specific part of the car industry: the pickup

truck market. The truck industry has attempted to provide solutions for the arising issues

mentioned, such as hybrid trucks and more fuel-efficient models. However, combustion, diesel,

and even hybrid pickup trucks increase greenhouse gas emissions every day (Fortenbaugh, n.d.).

Furthermore, it would be beneficial to provide a pickup truck that does not run on fossil fuel. For

the reasons listed above, TeslaMotors will introduce a fully electric pickup truck named the

Model TRX. Since it will not run on fossil fuel, it will be more environmentally friendly than all

of the current pickup trucks on the market. With careful analysis of the market, the Model TRX

will be available to consumers by 2015.

Market SummaryWith the increasing number of vehicles sold each year, there is a greater need for an eco-

friendly line of vehicles (EDTA, n.d.). All pickup trucks on the market, hybrid, combustion, or

diesel, use a source of fossil fuel. Therefore, there is a need for a consistent source of renewable

fuel. Finally, with a fully electric line of vehicles on the road, there would be less emissions and

a boost in the economy with the money saved from gas expenses.

The market for a fully electric truck falls into the personal transportation vehicle market.

In 2010, the global financial crisis caused a decline in the production of vehicles by 9 percent;

however, the car industry responded the year after with a 22 percent increase in production.

Since then, there has been a steady three percent yearly growth (EDTA, n.d.). The demand for a

new fuel source is responsible for an increased popularity of electric vehicles. Hybrids offer a

decreased reliance on fossil fuels; however, an electric automobile eliminates the reliance of

fossil fuels altogether, which is one of the many reasons for the expansion of the electric vehicle

market. In 2012, the total number of vehicles sold was over 14 million, of which electric drive

models made up 3.38 percent (EDTA, n.d.). In 2013, year-to-date, approximately 11 million

vehicles have been sold, and there was a 3.90 percent increase for all electric drive models

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(EDTA, n.d.). This illustrates a growing need and desire for electric vehicles. With new designs

and recent advances in technology, Tesla’s Model TRX has the ability to gain a significant

market share. This information gathered on the automobile market provides insight for the

execution of Tesla’s Model TRX, taking into consideration the business-to-consumer and

business-to-business strategies.

Market Analysis  Demographics

After careful analysis of the distribution of the 2011 annual household income in the

United States and a first party survey, the best suited demographic for the Model TRX are males

with an annual household income of at least $135,000. Males are a part of the target market

because the first-hand survey displayed that 79 percent of males expressed interest in the truck,

whereas a much lower portion of females expressed interest (Kuehni, Lokmagozian, Mirto, &

Sharp, survey, October, 2013). As for the targeted household income, the Tesla Model TRX will

not be within the budget of any individual that makes less than $135,000. Although an annual

household income of $135,000 is in the top 10 percent of the U.S. population (‘2011 annual

social’, 2011), the demographic listed above will be the most profitable target market for the

Model TRX.

GeographicsThe Model TRX targets outdoor-oriented regions. Such regions are targeted because

nearly two thirds of the population would use the truck for outdoor recreation (Kuehni, et al.,

survey, October, 2013). Outdoor recreation may be noted as but not limited to: camping, hiking,

traditional sports, and action sports. To distinguish outdoor-oriented regions from others, Forbes

Magazine produced a list of the 40 best domestic cities to spend time outdoors. It is safe to

assume that the 40 cities and its surrounding areas will contain the outdoor-oriented individual.

This list and further market research will be utilized to target the specific geographic locations.

PsychographicsThere are two important target topics related to psychographics for the Tesla truck: the

use of the truck and perceived social class. Based on these two topics, the targeted psychographic

type believes that they would use the truck for outdoor recreation and believes that they are

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upper-middle class. The targeted psychographic will be pursued because the first hand survey

established that the targeted demographic perceives themselves as upper-middle rather than

upper (Kuehni, et al., survey, October, 2013), and because 70 percent of all individuals plan to use

the truck for outdoor recreation (Kuehni, et al., survey, October, 2013).

The MarketMarket Needs

Recently, the car industry offers solutions that support “green thinking”, such as hybrid

and electric cars. However, what the market is lacking is a zero-emissions solution for the pickup

truck market—a market that provides a highly criticized car, said to be one of the most damaging

to the environment. An electric pickup truck by TeslaMotors would draw significant interest due

to brand recognition. Also, current pickup truck drivers may be intrigued by the idea. It will be

the perfect solution for those who would like the convenience of a pickup truck, but have not

purchased one due to the impact on the environment.

A survey has been conducted in order to verify these assumptions and to enquire if an

electric pickup truck by TeslaMotors would gain substantial market share. Fifty-five percent of

all respondents stated that they would be interested in the Model TRX, regardless of the vehicle

they currently drive. Seventy-one percent of current pickup truck drivers voiced an interest in

this solution by TeslaMotors. Tesla’s name recognition has increased in popularity, which is

reflected by the high number of people who have already heard of the company (85 percent).

When asked what they would want to change about their current car, 82 percent of respondents

mentioned that they would like it to be more fuel efficient, and 30 percent wished it be more

environmentally friendly (refer to Figure 1). The electric Model TRX will satisfy these wishes

(Kuehni, et al., survey, October, 2013).

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Better mpg

more room

Interior luxury

Better for the environment

Off road or towing capabilities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

82%

18%

15%

30%

9%

Figure 1: If you could change or add any characteristics to your vehicle, what would it be?

Figure 1: Survey

(Kuehni, et al., survey, October, 2013).

Market TrendsPeople’s increasing concern for the environment is a major trend that provides

opportunity for the Model TRX. TeslaMotors has proven to be a leading company in tackling

environmental concerns through its environmentally friendly automobiles. Furthermore,

TeslaMotors will appeal to even more customers by offering the Model TRX to the market.

Since a vehicle is a source of self-expression, the message conveyed by the Model TRX will

portray a “green” lifestyle. Nonetheless, average consumers are not the only customers that may

take an interest in this product. Many businesses use pickup trucks as company vehicles, which

creates a vast opportunity for the Model TRX. This product can be marketed towards companies

that are engaged in environmental protection and want to create a positive image.

Furthermore, gasoline prices are likely to remain high, which will result in many people

reconsidering their gasoline consumption. The U.S. Energy Information Administration (EIA)

projects an average price of $3.37 per gallon nationwide for the year 2014 (EIA, 2013). In a

short-term perspective, these high prices might seem insignificant compared to the high price of

an electric vehicle. Therefore, it is imperative that potential customers be educated about the

long-term benefits of electric vehicles in order to increase their willingness to pay a premium

(Martschenko & Gabriel, 2013).

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Market GrowthCompared to last year, electric car sales increased by more than 50 percent in the first

half of the year 2013. This growth can be explained by a better overall understanding of how

electric vehicles work, and how they are beneficial for both the customer and the environment.

Also, advancements in technology have led to lower car battery prices, which is a trend that is

expected to continue over the coming years. Due to lower production costs and increasing

awareness of electric car benefits, growth in the electric car market will be expected (Bigelow,

2013). For TeslaMotors, earnings are expected to grow 108.81 percent in 2013 and projections

display substantial growth over the next five years (Nasdaq, 2013).

According to Shanbhag (2013), the reason why Tesla has such great potential for the

future is the fact that Tesla provides solutions for problems that will gain a greater importance in

the coming years. The depletion of the environment and the scarcity of energy resources ask for

continuous innovation and for the use of renewable energy sources—the one thing Tesla

specializes in.

SWOT AnalysisStrengths

Producing an electric pickup truck fits into a market niche that possesses quite a few

strengths. A fully electric truck is not available in the market for consumers yet. We have a

strong marketing strategy that recognizes the consumer need for a more sustainable, yet stylish,

pickup truck.

TeslaMotors was founded recently, in 2003, by a group of engineers in Silicon Valley.

One aspect that makes Tesla such a strong company is its talented team of founders. Tesla’s goal

is “to accelerate the world’s transition to electric mobility with a full range of increasingly

affordable electric cars. We're catalyzing change in the industry. Tesla vehicles and electric

vehicles (EV’s) powered by Tesla are fun to drive and environmentally responsible” (About

Tesla, 2013). It currently produces (or is producing) all-electric, high performance vehicles such

as the Roadster, Model S, and Model X.

Tesla is a very innovative company and its ability to create these vehicles proves its

effective research and development process. Tesla has built a small, but loyal, customer base that

isn’t like any other car company. Its customers tend to be financially comfortable, interested in

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sports cars and car performance, and concerned about the environment. Most importantly, Tesla

“will help lessen global dependence on petroleum-based transportation and drive down the cost

of electric vehicles” (About Tesla, 2013). By producing the Model TRX, we can utilize and build

upon Tesla’s reputation, skills, and unique technology, which will open up an array of

opportunities.

WeaknessesWhile Tesla is a strong company with an excellent reputation, it has its weaknesses. One

weakness is its popularity. Tesla does not have much brand recognition yet, which is most likely

due to the fact that its cars are expensive and that the company is still fairly new and trying to

expand. Tesla’s high-priced cars can turn away potential customers and pose as a weakness.

Many consumers cannot justify spending so much money on a car, even if it may save them

money in the long run.

Another weakness is the battery life of a Tesla, or any electric car for that matter. A Tesla

does not have unlimited driving mileage. This poses problems to those who want to take longer

road trips into more remote areas (Noland, 2013). The batteries must be recharged every few

hundred miles (Lampton, 2008). This is a weakness because many people either do not want to

hassle with charging their car when on the road, or they simply cannot charge given their

location. If a Tesla’s batteries are depleted, the owner is stuck on the road and must be towed.

Charging also takes hours at a time for a complete, full charge at any regular plug-in outlet

(Tesla, 2013).

Tesla car batteries possess another weakness besides their mileage range. As with any

battery, the Tesla batteries can only be charged so many times before they cannot hold charge

any longer. For example, the lithium-ion battery pack in the Roadster has an average lifespan of

five years, or 100,000 miles (Lampton, 2008). Once dead, the battery will need to be replaced at

the expense of the consumer. Additionally, the “dead” battery needs to be disposed of which

there isn’t an environmentally friendly way to do this.

OpportunitiesOne of the biggest market trends today is the idea of more fuel-efficient vehicles. The

prices of oil and gasoline are unpredictable; however, they are expected to remain high (EIA,

2013). Consumers are concerned with these prices and are searching for better alternatives

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(Kuehni, et al., survey, October, 2013). As automotive technology continues to improve and

more cars are produced that have a better gas mileage, what is better than a car that does not

operate using gasoline? The Model TRX will be fully electric and targeted towards consumers

who need the convenience of a pickup truck, while also needing a superior alternative to

gasoline. All of the trucks on the market today are gasoline-powered and do not have efficient

gas mileage. For example, the 2013 Ford F150 has an EPA estimated MPG of 17/23

(city/highway), which is low when compared to smaller cars, yet it is among the most fuel

efficient pickup trucks today (Ford, 2013). The Model TRX has a great opportunity here because

owners will no longer have to pull into a gas station to fill the tank.

Another big opportunity addresses the recent market trend for consumers and businesses

to be environmentally friendly. The care and protection for the environment is a concern that is

somewhat overlooked by gasoline-powered vehicles. However, Tesla vehicles have zero

emissions, making it an appealing alternative to ordinary vehicles (About Tesla, 2013).

Battery producing companies for all kinds of products are an emerging market as well.

Research on longer lasting lithium-ion batteries is improving battery life for many consumer

products (Fisher, 2013). A breakthrough in battery technology will improve the life of a Tesla,

which will turn the company’s weakness into a strength.

ThreatsA potential threat to the Model TRX could occur if the price of gasoline were to drop,

and stay relatively low. Current pickup truck owners would most likely keep their pickup trucks

and the price of filling the tank wouldn’t hurt as many people financially. Also, people who are

in the market for a new pickup truck would most likely purchase a less expensive one, such as

the Ford F150, rather than a luxurious electric truck.

Furthermore, if there were to be a downturn in the economy, people would be less

inclined to purchase vehicles, especially luxurious ones. When money gets tight, people tend to

be cautious and save their money. In this case, it is unlikely that an average consumer would

purchase a Model TRX.

Suppliers for Tesla batteries are limited (Motavalli, 2013). By adding a new line to

Tesla’s vehicles, Tesla will have an even more increased demand for batteries. However, there

aren’t enough batteries in production currently. This poses as a threat for the Model TRX. For

example, each Tesla Model S battery pack uses more than 7,000 cylindrical 18,650 cells in its

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battery pack. These cells are unique and different from the ones used in other electric car

batteries (Motavalli, 2013). Production of batteries solely for the Model S might contribute to 40

percent of global cylindrical battery production (Fisher, 2013). Also, Elon Musk, CEO of

TeslaMotors, explained that even if the company used other existing sources of battery cells, it

would still limit Tesla to only a few hundred thousand cars a year (Motavalli, 2013). Without

enough batteries, Tesla’s rate of expansion will be hindered. If Tesla cannot produce enough

vehicles because of this, sales will be affected.

Finally, an obvious threat to Tesla is its competition.

CompetitionTesla has the first mover advantage, because it will be the first company to offer a fully

electric, luxury pickup truck to consumers, which will put it ahead of its competition. Tesla’s

Model TRX competes with luxury car companies such as Mercedes, Audi, Lexus, Porsche, and

BMW because of similar interior and exterior style and performance. It competes with

companies that offer hybrid vehicles, as well. Hybrids are suitable alternatives for those who

want to get significantly higher MPG than an average vehicle. However, Tesla still comes out on

top of this competition due to its electric engine. For example, Tesla competes for market share

with Toyota because it offers the Prius hybrid that is already quite reliable and reputable.

However, the Prius still requires the use of gasoline (Toyota, 2013). In addition to these

competitors, other truck manufacturers pose as definite competitors to Tesla, solely because there

are other trucks on the market. Tesla is not the only company offering a truck; therefore, it is

competing for market share with companies such as Ford, Dodge, Toyota, GMC, and more

(Addison, 2013).

Finally, Tesla’s main competitors are those that currently offer fully electric vehicles.

Some electric vehicles currently on, or nearing, the market include the Nissan Leaf, Chevy Volt,

Mitsubishi i, Ford Focus Electric, Fisker Karma, and the Porsche Panamera E-hybrid (Addison,

2013). These companies, especially Porsche and Fisker, are major competitors to Tesla (Okulski,

2013). Once Tesla releases the Model TRX, the technology is out for the world, and other

competitors will want to compete for market share. All in all, while there are no other companies

that currently offer a fully electric, luxury pickup truck to consumers, Tesla still competes for

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market share with every other automobile-producing company around the globe.

Product OfferingThe product offered is a fully electric Model TRX that is environmentally friendly, but it can

still be utilized similar to any of the current combustion, diesel, and hybrid trucks on the market.

The main focus with this new truck design is to provide a solution regarding the negative

environmental impacts of trucks and to relieve consumers of the reliance of gasoline. This is

done by creating a 100 percent electric truck, while maintaining the versatility, power, and style.

The Model TRX would have the same motor as the Model S P85. It gets up to 265 miles range,

has 416 horsepower, and reaches speeds up to 130 MPH (Musk, n.d.). This makes the

introduction of the product to the assembly lines very simple, and it gives the truck the

performance package at the stock model base. Therefore, the masses would flourish at the idea of

a sleek truck design with the power of the Model S P85 that has become so popular.

The ordering process is simple for a new buyer, as well as the experienced Tesla customer. It

all begins at a store near you or simply on the Tesla webpage. Once the order is placed and

processed, the customer is given an estimate, and the product is ready to drive after two to three

months. There are multiple personalization options available for the Model TRX. These include,

but are not limited to:

Ride height

Wheel size

Rim selection

Color

Interior design/color

Tire selection

Interior audio

Light packages

There are multiple ways of charging the Model TRX as well. As long as there is an outlet

present, the ability to charge the truck is endless. The charging time of the battery is dependent

on the type of outlet available, based on voltage emitted. When the vehicle is delivered, a Tesla

specialist will explain how to use the mobile connector (Musk, n.d.). There are many adaptors

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available for charging. The main adaptor is the standard household outlet adaptor, which has

plenty of power to fully charge the Model TRX overnight. For those long road trips with shorter

periods of time to charge, there are supercharge stations that are soon to be placed along all

major interstates in the country and have the ability to charge about half of the battery in twenty

minutes (Musk, n.d.). Everything that is ordered from Tesla is thoroughly tested before delivery

to the customer.

With any purchase of the Model TRX, there is a four year or 50,000 mile warranty. For

the electric motors, there is an eight year, unlimited mile warranty that protects all of the

consumers after purchase. With the warranties comes a maintenance plan provided by the local

Tesla dealer. This will take care of the customers need to plan regular scheduled maintenance on

the vehicle, ensuring total customer satisfaction and maximum life of the Model TRX.

Keys to SuccessIn order to gain market share in the truck industry, there are key factors that will aid the

Model TRX’s success. The most obvious factor is the 100 percent electric power of the truck.

The electric power of the Model TRX will eliminate the reliance of fossil fuel for customers,

which will lead to savings. Furthermore, the projected sales growth of Tesla displays that the

niche market for fully electric vehicles is rapidly growing (Nasdaq, 2013), as well as the increase

of sales in the truck industry (Stoddard, 2013). Due to this information, it would be wise to

increase the width of Tesla’s product mix, leading towards a beneficial release of the Model

TRX.

Given the recent gas prices, and the need for renewable energy, the demand for fully

electric vehicles will rise, resulting in two more keys to success for the Model TRX. Another

factor that will help the Model TRX in the automobile market is the convenience of a 90 second

fully charged battery swap. At a recent demo of the new battery swap stations, Musk gave a great

show that was documented by Rogowsky in a Forbes article:

With the driver remaining in the car, an automated machine disconnected the battery,

removed it, and replaced it with a fully charged one. Simultaneously — on video — a

Tesla employee was filling a gas tank at what Musk claimed was the fastest gas station in

L.A. At the 1:33 mark, the Tesla pulled away, while the gas-powered car continued

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filling. Musk apologized for making folks wait and then the crowd roared as a second

Tesla drove out from behind a curtain and also had its battery swapped (this time it took

about 96 seconds). That car also drove off before the gas fill-up was completed, which

occurred after about 4 minutes. (Rogowsky, 2013)

Finally, Model TRX offers individuals and corporations the ability to show case

corporate social responsibility and the convenience of recharging a vehicle on site or simply

switch out batteries at a local supercharge station. As of late, Americans have shown a deep

desire to save the environment and use renewable resources.  

Critical IssueUnfortunately, there are always factors that may cause issues and obstruct the Model

TRX from performing well in the new market. The major issue we may encounter is the slow

manner in which the economy is recovering. Unlike major competitors that have already

established economies of scale, the Model TRX is at a higher price, leaving it only available to a

small market that would not be able to support the production. This would leave the major target

market of the blue collar workers and the day-to-day truck user out of the market and may cause

the Model TRX to be dropped from future production. All of these issues leave Tesla and the

Model TRX vulnerable.

Marketing StrategyValue Proposition        The Model TRX is specifically tailored to the target market briefly mentioned in the latter

sections: Demographics, Geographics, and Psychographics and elaborately discussed in the

following section labeled as Target Market. For a relatively high price, the Tesla consumer

receives everything that they would want in a pickup truck and more. The Model TRX’s fully

electric capabilities relieve consumers of gasoline costs and a guilty conscience. With the Model

TRX, no sacrifices will have to be made.

The high quality of the product, which consists of unmatched crash ratings, sleek design,

sports performance, and luxury, leaves the customer satisfied. Lastly, the price of the Model

TRX produces a sense of exclusivity that nearly all individuals wish to be a part of. Put simply,

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the Model TRX is an automobile that most truck owners wish to drive, but only a select few will

get the chance.   

MissionTesla’s goal is to “accelerate the world’s transition to electric mobility with a full range of

increasingly affordable electric cars” (Teslamotors, 2013). By introducing the TRX, TeslaMotors

will revolutionize the truck market.

Marketing Objectives        Based on the data from a survey conducted by Tesla Motors, 82 percent of all individuals

want to improve their MPG rate and 30 percent want their vehicles to be better for the

environment. Furthermore, 15 percent of the people surveyed want a more luxurious interior and

18 percent want more room (Kuehni, et al., survey, October, 2013).  It is the goal of the Model

TRX to add customer value through the information provided by the survey. With the aid of the

marketing communication strategy and word of mouth, Tesla’s high quality product is expected

to be successful.

Financial ObjectivesTesla’s goal is to sell 2,700 units in the first year, 5,000 units in the second, and 15,000

units in the third. Each Model TRX will be sold for an average of $80,000. Tesla’s goal is to

break even by the end of the second quarter of the second year.

Target Markets        In the section listed as Market Analysis (p.3-5), the target markets were guided by three

main criterions: demographics, geographics, and psychographics. Each criterion has subtopics

that are related to the characteristics of an individual, such as household income, gender, and

personal pastimes. Based on these subtopics, first party and third party research was conducted to

find the best fitted target markets for the Model TRX.

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DemographicsThe Model TRX will target a specific type of demographic. For starters, it will be on the

expensive end of a vehicle. Therefore, the target market will be tailored towards individuals who

earn a relatively high income. Although household income will be a main concern for targeting a

specific market, the gender and family orientation will be of concern as well.

Household IncomeA 2013 Nissan Versa S can be sold at $12,780, which would make it one of the cheapest

new cars on the U.S. market (Healey, 2013). On the other hand, there are cars on the market that

cost over a million dollars. The Model TRX will not be on either end of the spectrum. Based on a

rough estimate and the base price of $62,400 for Tesla’s Model S ("Facts," 2013), the Model

TRX may range from $70,000 to $120,000. That being said, the targeted consumer will have an

annual household income of at least $150,000 and up. This will narrow the market down greatly.

According to the U.S. Census Bureau, in 2010, the top 10 percent of U.S. households reported an

annual household income of $135,000 or more (‘2011 annual social’, 2011). Thus, based simply

on annual household income, the pickup truck will target less than 10 percent of U.S.

households.

GenderThe marketing for Tesla’s Model TRX will be geared towards men. Based on a market

survey about the Model TRX, men showed a higher interest than women (Kuehni, et al., survey,

October, 2013). Only 21 percent of the females surveyed displayed interest in the truck, whereas

79 percent of all male respondents expressed their interest. Therefore, gender plays a significant

role in the marketing of our product.

Family OrientationAccording to the same market survey, more individuals that are married with children

expressed interest in the Model TRX than those that do not have children. Therefore, the

marketing will target individuals married with children. However, singles will not be

unaccounted for because a significant portion of the singles expressed interest, as well.

Nonetheless, more single individuals would need to be surveyed before a solid conclusion can be

made about that specific demographic.

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GeographicsAccording to data gathered for a Model TRX market survey, the density of regions (rural,

city, or suburban) did not affect the interest for a Model TRX (Kuehni, et al., survey, October,

2013). However, regions that are more outdoor oriented are favorable places to market to, as well

as regions with a higher average income distribution compared to the total income distribution in

the U.S.

Outdoor Oriented RegionsNearly two thirds of the people surveyed mentioned that they would use the truck for

outdoor recreation. Therefore, it would be wise to market the truck to regions where people

spend more time outdoors. Furthermore, high density regions that are known for their outdoor

qualities are a perfect place to market the Model TRX. An article provided by Forbes Magazine

lists 40 of the best domestic cities to spend time outdoors. At the top of the list are cities such as:

San Francisco, San Diego, San Jose, and Jacksonville (Ruiz, 2008). Although these cities are

outdoor oriented, only the regions of a higher than average income distribution will be the most

successful to market to. The product will be marketed to these areas and the areas surrounding.

PsychographicsThe behavioral factors of individuals affect how the Model TRX will be marketed. For

example, the Model TRX market survey unveiled that there is a trend relating to the activities

that the truck will be used for. Additionally, the perceived economic status of our targeted

demographic is similar throughout the group.

Use of the TruckAccording to the market survey, 70 percent of the respondents reported that they would

use a Model TRX for outdoor recreation (Kuehni, et al., survey, October, 2013). Although, only

17 percent of the individuals that own a truck mentioned that they use their truck for recreation.

Nonetheless, when people envision themselves driving a truck, the majority expects to use it for

outdoor recreation. Therefore, the Model TRX will be marketed towards the outdoor oriented

individual. This will send a message aimed towards the type of individuals that envision an

outdoor use of a truck, which will generate a larger response.

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Upper-Middle ClassThe targeted demographic that makes over $100,000 of annual household income view

themselves as upper-middle class, with the exception of a few individuals that would categorize

themselves as part of the middle class (Kuehni, et al., survey, October, 2013). Based on an

estimate from the U.S. Census Bureau, the individuals that make over $100,000 are well over the

25th percentile of average household income in the U.S., which would put these individuals in the

upper-class range (2011 annual social, 2011). However, that is not the way that the targeted

demographic perceives itself. Therefore, the Model TRX will target individuals who consider

themselves as part of the upper-middle class. Thus, the Model TRX will not be ridiculously

lavish or super-powered like the cars on the market that are worth millions, but rather, it will

have a clean look and be subtly luxurious. The truck will make a statement, but it won’t cost a

lifetime savings.

Positioning        Before one can understand the positioning of the Model TRX, the individual must

understand the major product attributes of the truck. For starters, the Model TRX will be known

for its safety ratings. Much like the unmatched safety ratings of Tesla’s Model S (‘The model

s’,2013), the Model TRX is planned to have similar crash ratings. Furthermore, the Model TRX

will be fully electric, unlike any truck currently on the market. The truck will be free of gasoline

consumption. Lastly, the Model TRX will have a relatively high base price of $75,000.

        Each of the attributes mentioned above are responsible for a perceived position in the

consumer’s mind, and as for the Model TRX, the attributes create a more-for-more position. For

example, the Model TRX’s high safety ratings will produce a perceived sense of quality. This

high sense of quality is positive image that will be used to Tesla’s advantage. Unlike a car of

lesser quality, the Model TRX’s quality will lead to consumer trust. Next, the fully electric

capability of the Tesla truck will differentiate the product from all of the other trucks on the

market. Therefore, consumers will perceive the Model TRX to be innovative and unlike the

mundane automobiles that are offered to them. Finally, the Model TRX’s high price will lead to

the consumer perception of exclusivity. Unfortunately, exclusivity can be perceived as positive

or negative. On the positive side, consumers will want the car simply because it is difficult to

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attain. On the negative side, the price’s exclusive nature may drive individuals away from the

Model TRX because of its lavish manner.

StrategiesThe strategy of the Model TRX focuses on the trucks value proposition. The first step is

to reach the targeted market (simply put, outdoor-oriented males with higher incomes) through

carefully placed advertising and public relation events. Once the target market becomes

purchasers, not only will the superior value proposition have drawn them in, but the superior

value proposition will be the cause of repeat customers and referred customers. Tesla will rely on

the satisfaction and promotion of the product.  

Marketing MixPricing           Before an estimated price is made for the Model TRX, it is understood that the truck will

have a base price with an optional product pricing format. Therefore, the base price of the Model

TRX is the absolute minimum, and additional features may be added to the Model TRX at an

additional cost. Additional features may be a larger battery capacity, a navigation system, leather

interior, etc.

To estimate the pricing of the Model TRX two factors were taken into consideration. The

first factor is the relative pricing of the Tesla models. This factor takes the approach of product

line pricing. At the moment, Tesla’s only model offered to consumers is the Model S (the

Roadster is no longer available, and the Model X will be available in 2014). Thus, the base price

of the Model S, which is $62,400 ("Facts," 2013), is used as a relative price range for the Model

TRX. The second factor is “the average transaction price of a full-size pickup [,which] is now

$39,915” (Paukert, 2013). This factor emphasizes the relative pricing of competitors; however,

the value added to the Model TRX, in the form of electric capabilities and luxury, increases the

pricing. Taking these two factors into consideration, the Model TRX base price is $75,000.

Distribution           The Model TRX will be distributed in the same fashion as all other Tesla automobiles.

Unlike the normal franchise structure of the automobile industry, the Model TRX will be sold to

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consumers directly through Tesla. The consumer contact point will be at one of Tesla’s own

stores or galleries. At the moment, Tesla has over 60 stores and galleries, of which there is a

significant international presence (Musk, 2013). However, the Model TRX will only be

distributed in the United States.

        There are numerous reasons why the Model TRX will be distributed in the manner

described above. The Model TRX will not be sold in the traditional franchise manner because of

the conflict of gasoline vs. electric vehicles. For example, it would be difficult for a car salesman

to “explain the advantages of going electric without simultaneously undermining their traditional

business” (Musk, 2013). Furthermore, most consumers choose the car that they would like to buy

before they go to the dealership, which provides little opportunity for Tesla sales. Lastly, the

Model TRX will only be distributed in the U.S. because the pickup truck market is thriving there

(Paukert, 2013), which makes a beneficial region to launch the new truck.

Marketing Communications           Advertising and public relations will be the two main tools of the integrated marketing

communications for the Model TRX. Carefully communicated advertisements will take place on

specific television programs, websites (social media and other targeted websites), and in

business, tech, and automobile magazines. Next, public relations (PR) will be utilized in order to

host the car at numerous events ranging from car shows to golf events. Furthermore, PR will gain

press relations with certain publications to publish reviews of the automobile. The specific

communications mix will be used to spread the word and establish a reputation for Tesla.

TeslaMotors is a relatively new company, and it is necessary to build its reputation through the

following methods.

Marketing Research        Primary research for our target market consisted of generating an original survey that

addressed the public and centralized our focus on who we wanted to target and what they were

looking for in a new vehicle.  It is important for “research to gather and analyze information

about the moving of a good or service from the producer to the consumer” (Marketing Research,

n.d.).  This survey addressed the age and general demographics of Monterey County while

supplying valuable information about a fully electric Tesla truck.  It was given online as well as

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in person to everyone willing and available. Secondary analytical research was done online as

well.  Information about the current market conditions and TeslaMotors was found online, as

well as, general information about the demographics and the technology planned for the Model

TRX.  

As the Model TRX matures in its product life cycle, ongoing research will need to be

conducted. Research will consist of updating the demographic data, addressing accessory

options, updating technology, and staying up to date with the disposal of byproducts.  There will

need to be constant research on technology and waste due to the ever increasing technology and

the high volume of battery waste used in the process of production.  Demographics are

constantly changing and will always need to be addressed and updated if there is to be a long

product life cycle for the Model TRX.

FinancialsBreak-even Analysis

The following table is the estimated break-even point for the cost of production of the

Model TRX.

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Figure 2: Cost Breakdown 1

Tesla will have to sell 4,243 units in the first year to break-even. Tesla will not make a

profit in the first year because the break-even volume is much greater than the expected first year

sales volume.

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The following table is the estimated break-even point for the cost of marketing of the

Model TRX.

Figure 3: Cost Breakdown 2

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Tesla will have to sell 26 units in the first year to break even, or generate sales of

$2,108,264.70. Tesla will be able to break even in the first quarter of the first year according the

sales forecast below.

Figure 4: Break-Even Analysis

Sales ForecastIn the year 2012, the opening year of the Model S, the sales forecast of the Model S was

at 5,000 units (King, 2012). However towards the end of 2012, the prediction of the units sold

dropped to nearly 3,200 units (Voelker, 2013). The previous introduction of the Model S has

helped gauge an accurate forecast for the Model TRX. It is projected that 2,700 units of the

Model TRX will be sold in the first year at an average cost of $80,000. The average cost is at

$80,000 because not all Model TRX customers will purchase the base model of $75,000. For the

following two years, the sales will exponentially increase due to quality of the product and

consumer satisfaction.

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Figure 5: Sales Forecast

Expense Forecast

Figure 6: Fixed Selling Costs

Tesla will employ four people for the Model TRX marketing department and each will

make a $150,000 salary.

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Figure 7: Variable Selling Costs

Tesla plans to advertise on prime time television 24 times in the first year. The average

cost of a 30-second advertisement on prime time is $108,956 (Crupi, 2011). Tesla estimates

spending $110,000 each on 24, 30-second advertisements.

ControlsFor each quarter, we will track all of the units ordered and make sure to have five models

on each show room floor with all of the different options available for the Model TRX.  The

Model TRX will have to be custom ordered just like all of the other Tesla vehicles offered.  This

allows more data to be collected and makes it easy to keep track of the total units sold.  Analysis

of the data will be done by a team of specialists making sure to capture all of the options chosen

and to address all of the major problems with orders. To meet our sales goal of 2,700 units in the

first year, we will rely on general marketing and referrals from word of mouth.  This will be done

with general advertising and PR.  

ImplementationThe implementation process of TeslaMotors and the Model TRX begins with first

contacting current suppliers and manufactures of products needed for producing the vehicle.

After suppliers are contacted and test vehicles are completed, there will be a multitude of tests

ensuring the Model TRX meets the set standards of power, durability, luxury, and battery life

before sales begin. These steps are important to ensure consumer value.  Since TeslaMotors has

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its own stores for distribution, there will only need to be models on the showroom flow of select

locations, making it easy for consumers to see an actual Model TRX.

After all of this is complete, consumers can begin placing orders with TeslaMotors.

Using this method of ordering, overhead costs will be almost non-existent and the issue of over

production will be avoided.  Upon completion of the Model TRX, a certified technician will be

available to deliver the vehicle and review all of the specifications with the customer, or the

customer may pick up the Model TRX at the store.  Testimonials will then follow the order to

further help the promotion of the model.

Marketing OrganizationFor TeslaMotors, business-to-consumer marketing will take place.  This will need general

marketing tactics such as advertising, PR, and word of mouth referrals.  One of the most

effective tactics we plan on using is marketing at car events in all locations and sponsoring

events.  At these events sales representatives will be walking around promoting the Model TRX

and handing out information brochures for consumers to look at.  Our marketing department

includes the sales team, phone support, technicians, and PR representatives.  The sales force

team will travel with show models to various events nationwide, and eventually globally, to help

promote the Tesla brand and the new Model TRX.  The phone support team will be available to

help place orders, set dates for regular maintenance, and assist with any problems customers

have with the vehicle.  Most importantly, the technicians will have a great opportunity to talk to

the consumers when they review the specifications of the vehicle making sure everything is up to

the consumers’ expectations.  They will have the last word with the customer making this contact

point the most important because it will be the last impression of TeslaMotors.  

Below is a structured diagram of the marketing organization.

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Figure 8: Marketing Organization

Contingency Plan        Difficulties that arise when entering the sensitive truck market consist of meeting

consumer needs, having an appealing style, making sure to address the wanted versatility and

power, ensuring the economy can handle the price, and maintaining the unified Tesla image.  

In the future, increasing demands regarding the battery life and power may become a

pressing issue.  Such an issue has the potential to decrease the life cycle of the Model TRX and

create a problem with customer satisfaction. This may be a huge difficulty for the Model TRX

due to the fact that it will be the first of its kind in the market.  Being a leader in any market is

difficult because consumers hold leaders to high standards. To handle this issue, Tesla will rely

on improvement in technologies and superior engineering.

The worst case scenario for the Model TRX is a lack power in certain situations and

negative consumer buzz.  Another situation could be operation malfunctions like some of the

recent Toyota mishaps causing trust issues with the new model and Tesla.  Either of these

scenarios would be addressed right off the bat and fixed, or publicly spoken about reassuring the

public that the truck is a top brand and top quality with kinks that are being worked out.  Early

models that are still under warranty would also be addressed with no cost to the consumer.  The

“activity undertaken to ensure that proper and immediate follow-up steps will be taken by

management and employees in an emergency.  Its major objectives are to ensure containment of

damage or injury to, or loss of, personnel and property, and continuity of the key operations of

the organization” (Contingency Planning, n.d.).  Consumer satisfaction is the number one

objective, which is the reason a high quality contingency plan is vital.

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