Distribution_Channel_Manager_for_Tesla_Motors

MKT301 Module 3 Dr. Matula You are the Channels Manager for Tesla Motors.  Explain how you would develop a distribution strategy for your cars. Distribution or place is part of the four elements of the marketing mix. Product, pricing, and promotion along with place is what composes marketing. Although many different views have been used the four P’s are still the most common. When it comes to distribution there are many aspects to consider. In distributing one must consider what channel or channels is important and how many because more than one is a possibility. There is direct and indirect, and also the decisions of how many intermediaries are going to be in place if any. Several things need to be addressed before residing on a channel. Intermediaries and distributors have to be adequately chosen. What type of market segment would fit distribution' Distributors have to be familiar with target consumers and segments. Determining the experience and track record of the intermediary must also be assessed. How much training and support will the distributor require as well' The distribution channel in way is very similar to the concept of “supply-chain”. In short it is about getting a product, or a good from point A to point B. Just like in supply-chain logistics play a critical role in the distribution channel. The idea is to achieve good “distribution flow” by addressing the right intermediaries and segments. Intermediaries vary depending on the product at stake. Intermediaries can be wholesalers, agents, retailers, and the internet. “In fact, while the Internet is playing a major role in changing product distribution and is perceived to offer more opportunities for reaching customers, online marketers still face the same distribution issues and obstacles as those faced by offline marketers.” (http://www.knowthis.com/principles-of-marketing-tutorials/distribution-decisions/) In this case the company of focus is Tesla Motors. Tesla Motors began in 2003 and to introduce a preview of the company a quote is used from their website. “Tesla Motors was founded in 2003 by a group of intrepid Silicon Valley engineers who set out to prove that electric vehicles could be awesome.” (http://www.teslamotors.com/about) The company first originally planned to outsource most of its production to Asia. A contract manufacturer in Western Europe would ensure quick access to the U.K. market. Most of the employees at the company are engineers. If really thought of further, Tesla has a difficult task in establishing a well coordinated distribution channel because they are producing a new idea in a solid industry. Tesla has the mission to introduce electric automobiles to the world. Given the economic situation many are hesitant to embark in a collaboration with what can be considered a radical concept. The key to formulating distribution strategies is to identify needs of customer and determining how these needs can be fulfilled. For Tesla Motors, the market segmentation includes socio-demographic variables, psycho-graphic variables, and behavioral variables. There are many ways to segment markets, but I would lean Tesla over towards use of a psychographic segmentation strategy. Tesla should not try to appeal to everyone by engaging in a mass marketing campaign. A concentrated segmentation strategy will allow Tesla to employ its limited resources more efficiently, and not everybody is yet into the “green” trend. Tesla needs to study different segmentation methods to better understand the profile of the customers in each of the segments. Studying and differentiating the segments will allow Tesla to gain a broader look into the consumer market. Customers seek various features in making a purchase. These could include the low operating cost of Roadster model S. Customers could get drawn to the fact that the model S is as good as a conventional car in terms of miles covered in just one recharge. The exotic looking model S is not all about being conventional and besides aesthetics performance numbers also prove it. Customers who want to have the looks and acceleration of a sports car coupled with low operating cost and environment friendliness should be targeted. Tesla Motors being an automobile producer would be best suited with a either a direct distribution channel which cuts any “middle men” or intermediaries out, or an indirect with just one intermediary being a retailer. Most automobile manufacturers use the direct channel by selling directly to the customer. Ferrari for example sells a certain line of vehicles exclusively to certain customers. This of course is not the goal for Tesla, but selling directly to the public can reduce a number of distribution complexities and less expensive. Selling directly aids in attaining more personal knowledge of the customer hence a deeper awareness of the market. Out of all the channels in distribution I believe this route would win over the most consumer loyalty. Here we are getting to get to know the consumer in a more personal level. It will also be possible to get direct feedback in improvement efforts for future or current Tesla products. The second route I would consider would be to use a trusted retailer, which needs to share Tesla’s outlooks. This channel only adds one more player into the game. Therefore it is not too far off from the direct approach but not too intricate in adding other intermediaries. Having a Tesla retailer can widen distribution, size, and exposure. Tesla is still a young company and the horizon in view right now should be domestic. It will not be wise to offshore manufacturing until the products have matured and stabilized enough. Retail sites can offer comparison of the automobiles, and more importantly in this industry visual, and “hands-on” capabilities for potential customers. REFERENCES http://www.teslamotors.com/about http://www.knowthis.com/principles-of-marketing-tutorials/distribution-decisions/what-are-channels-of-distribution/