Tesla and the Limits of Product Orientation!
I saw an article on Sunday morning that hit the intersection of a few things I really like:
Which I took as a sign that I should write about electric cars since I was going to write about them last week after reading about the F-150 electric truck.
Before I get to Tesla, I had the opportunity to try and Bud Light Seltzer on Sunday at the Washington Nationals game, and let me say it was one of the worst tasting things I’ve ever had. So there is an update on last week!
Back to Tesla, they are noted as a business that stretches the limits of not believing in marketing. Though Elon Musk is always out there doing tons of promotions and PR to drive awareness of Tesla, Space X, and the Boring Company.
But…they don’t believe in marketing.
Despite their lack of marketing and advertising, they sell like crazy and are super valuable, yeah?
Last quarter, Tesla made a pretty good profit, but the dirty secret is that it didn’t come from the company selling cars, but selling Bitcoin and emissions credits.
And, the value of their stock seems to be largely driven by some belief that Tesla should be valued like a tech company and not a car company.
It sounds like I’m down on Tesla so far, right?
It is just the opposite.
We have a Model 3 and would totally buy another one if we needed a new car right now.
But the bigger concern is with Tesla and the limits of their approach to marketing and selling their cars.
Because as more competition comes to market with different price points, scale, and value propositions, the idea that Tesla can rely only on their product and educating the market on their product to drive growth.
Electric cars can still feel a little out of reach for people:
You see this when you see folks still stop and gawk at the cars when you are outside of big population centers.
Mostly this feeling shows up in purchase data where only around 5% of Americans actually have electric vehicles.
It isn’t that people don’t know about them, or aren’t curious about them, or even that they might not be interested in them. It is just that the technology might seem like a bridge too far for people just yet.
Range Anxiety is one thing. Along with a lack of charging infrastructure. And, some cars just don’t have fast charging capabilities.
All things that President Biden’s infrastructure plan hopes to address, but not things that education alone are likely to solve.
Because you can know that there is infrastructure coming or available. You can understand the technology is amazing. And, you can even love the idea of never having to go to a gas station again, but until it seems like there are tons of folks buying into electric vehicles…you are going to struggle to hit a mass audience.
Tesla still seems like a luxury brand:
First, you don’t want to lose that luxury feel either.
That is what made you the most dominant electric car maker.
At the same time, you also want to have an offering at different price points that your customers can move into.
Right now, the ability for people to be able to get their hands on the entry-level Model 3 might still seem limited to people that are paying attention. All the while, you can get your hands on a higher price Model 3 pretty easily.
Both fit the narrative that the low-cost Model 3 was just a ruse.
The solution is part education, but it is also about brand architecture and providing a solution that a potential buyer can look at and say that’s for me.
I’d argue that Mercedes brand expansion into lower-cost models has harmed their business on the whole, but they do show you how to do this effectively starting with the GLA and a starting price in the low-30s.
For Mercedes, you can tell the difference as you move up the value chain with them.
For Tesla, the answer to the luxury brand feeling isn’t to devalue the luxury, but to look at creating a product that captures the Tesla mystique while protecting the brand.
Again, not something education alone helps with.
Even if education is the answer, it has to lead to action:
At the heart of marketing is getting people to take action on something. In my career, I’ve been responsible for a few of the following actions:
Getting someone to buy wine.
Getting you to vote for a candidate.
Pushing you to vote in general.
Offering you the chance to make a donation.
All of these have specific sequences that get you to the call to action.
The product orientation call to action is more of a soft, apologetic reference to a buying opportunity “Custom Order”.
The real challenge of product orientation lies in the idea that people are just going to take action because they know it is the right thing to do once they’ve been educated.
In talking to a bunch of real estate agents that I know, almost universally they tell me the toughest part of the job is getting folks to actually take action on making an offer. They know the product, know the price, know the situation, and still hesitate.
Until the salesperson gives them a little push in the form of the Call-to-Action!
Without action, your marketing is just “content” and that doesn’t always lead to sales.
Like my first sales manager told me when I started selling water filters in high school, “Ask for the sale.”
So Tesla is a great product and knowing about them is a key to loving them, but just sitting back on “education” and Product Orientation alone isn’t going to drive Tesla to the next level in their sales.
Instead, they need to focus on three things:
Ensuring the product mix is right.
Putting the idea of ownership of the electric car in everyone’s head.
Asking for the sale.
That’s simple, but it does mean that they will have to change their no marketing stance.
See you next week!