I think it may be time for some TV and radio spots to get the word out there. Very few people even know Tesla exists. Is it too soon?
Although I agree that brand recognition is low, I believe it is too soon to advertise.
TM's full production for 2012 is sold out, and I suspect that the first half of 2013 production will be pre-sold as well. When the pre-sold backlog begins to decrease, advertising should begin.
I also think it might be too soon. The masses want what they want when they want it after being told what it is they want. If you start placing good TV ads everyone will want one then throw a fit when they find out they have to wait.
In the SF Bay Area, Tesla gets lots of news coverage. During my morning commute, the radio news station I listen to usually quotes the current TSLA stock price during their financial update as well.
TL;DR wow, this turned out to be longer than I had intended...
Why do companies market? Various reasons but usually the top 3 are, because they aren't making enough money, they aren't attracting new customers and finally, they aren't making enough money. TM doesn't have this problem right now. But they most likely will since they can ramp up production to appease their backlog in a timely manner.
Is there a time delay of marketing? Yeah, about 2 years (my experience; YMMV) in a practical sense for a large expense and steady state increases. You can see this in residential housing builders as well; another really large expense where the value is only understood when it stands the test of time and usage. The general population needs to 'ensure' quality and value. For TM to go beyond 20K/year they will need to have proven field quality. This doesn't happen overnight, it takes time, it takes Car and Driver, Road and Track, Consumer Reports and even Top Gear (my favorite show even though it's mostly vaudeville). Much more than just advertising, the TM Model S customer is not coming from Chrysler or Chevy or trucks or Hyundai. It's coming from BMW, Lexus and Toyota whose customers are not swayed by a "It's halftime in America" commercial during the Super Bowl. These customers know their stuff, they will compare the value and want to stretch their luxury dollar balanced with industry leading 'proven' quality.
Why do companies like TM market? Why does BMW market? Doesn't everyone know that the M5 is the best 4 door sedan on the planet? Well, no, not everyone knows that, or agrees with that, doesn't matter if all the experts agree, BMW needs to shout it from the hilltops, then and only then will you see high adoption rates among those buyers that are not 'into cars' or 'petrolheads'. That's just the way it works.
So, are there companies that don't market that have high priced luxury items? Yes and no, none that really matter to this application, there are several luxury brands you've never heard of that have such small marketing spend that you'd need to find their content on YouTube or a Google search. All car companies market since their is so much emotion built into cars. Next time you see a beige car on the road and you meet the person that choose that car, ask them why? Why beige? The answer may surprise you as I'm guessing they'll say, well, I like beige. Then ask them how much of a discount they got on the 'beige' car? If they are honest, they'll tell you. The only reason that beige cars are produced is for fleet applications and the order tolerance are sold at discounts.
What the hell does this all mean? TM needs to advertise at a pace that is consistent with their business goals and applicable market. Accounting for marketing lag and current street cred, if they are not attracting at least 100 buyers/day by the time they get to 5000 backlog (aka 6 months during initial ramp) they'll need to test the waters. I'd spend the money attracting magazines and blogs first (NOTE: They are already doing this) since word of mouth and viral is better these days for any startup (sorry, TM is a startup in the eyes of the applicable market). The high price aside, a well written, high profile 'review' is going to attract buyers. All the 2006 and earlier M5 and S6 type guys will migrate first and then it will trickle down and out. I just doubt that TM will find that an acceptable migration.
When is the marketing roll-out then? Gun to the head guess = Late winter 2013 makes sense to me where TM can put quotes from mag's and blogs in the adverts. And might have enough data to increase the warranty to industry leading (this will be key) to ensure that folks know they will have a safety net for going with a rather unproven company. Light spend to track analytics, one spot, prime time, test the waters, go with a sitcom and drama on repeat (every com break). Then measure with a Gallup poll. Iterate over 3 weeks. Total cost ~$5M. Then nothing and keep polling. If you get enough to meet your quarterly goals then stand back for a quarter. Always supplement when bad news hits. Be ready with spend for the troughs. You get the idea...
The masses want what they want when they want it after being told what it is they want. If you start placing good TV ads everyone will want one then throw a fit when they find out they have to wait. (Sudre)
+1 exactly my thoughts.
"Where is the AWD option in Design Studio for the S?" ;)
Perhaps Tesla should have some minimal advertising this summer, even though this year's deliveries are sold out. Virtually nobody on the east coast has ever heard of Tesla Motors. When I show people a photo of the car, some have asked if Tesla is a German company that's producing cars in the USA.
By early fall, there should be several hundred sedans on the road east of the Mississippi. However, I'm told that nearly half (40%) of all reservation holders are in California. Between DC and Florida, I currently only see a Tesla roadster every 3 months, or so.
I'm sure Tesla has a marketing plan. As a stockholder, it would be nice to know what that plan is.
Way too early to advertise.
If you walked in today, you couldnt get a car for well over a year. No point in taking on advertising expenses for something you can't sell.
But when they do, I hope they keep the tag line;
"Does your other car know I'm coming?"
They should start advertising when they're caught up to the point that they're manufacturing the vehicles that were ordered two months before. That way folks learning about Tesla will be able to go down to the local store and get one in a reasonable amount of time. There's no reason to advertise for a product that you can't deliver.
Super Bowl 2013, if the San Diego Chargers are participating...
Peak, I guess that means no commercial.
lol w/ both of you (for different reasons)
I think its too early to advertise because too many people will have to wait. When the Tesla Model S starts appearing in the streets of the world, that will be advertisement in itself. At that point in time, people will see the S, see the Tesla branding, and that in turn will create awareness of the Tesla Motors, the company. I'm certain too that the media will give Tesla Motors plenty of free advertising when they start writing articles as the Model S vehicles start rolling off of the assembly line. Perhaps in early 2013 when they have 20k orders to fulfill, providing it is not mostly sold out, then that would in my opinion be a strategic time to advertise.
My two-cents. :)
Bravo on the "Believe the Hype" article Max! Simply BRAVO!!!
Nothing is more powerful than word of mouth and experience. There is a YouTube video where a Roadster owner says the biggest adjustment he has had to make is planning extra time to talk to people about his car because EVERYWHERE he goes people stop him and ask questions. I think more people know about Tesla motors than any of us imagine. The reservations are important but when our neighbors, coworkers etc see the car day after day, when strangers see our car with a license plate that is several states away, when they pace with us down a highway and travel 150-250 + miles, and when they see us driving around in the bitter cold it will sink in better than any commercial possibly would.
There is no competition so there is no need to advertise to get noticed.
just my opinion.
I was wearing my Tesla jacket the other day and someone asked me what my favorite song was. I was confused and they said I had a Tesla jacket, like the rock band. I had to laugh but it gave me an opportunity to talk about the company.
Don't expect to see television advertising in the near future. Tesla's marketing strategy does not include TV spots since the entire automotive world is already watching us as we launch the world's most advanced sedan.
Monterrey Blue Model S Sport
Friends and Family #317
Tesla is doing fine with no advertising! Besides, why do you need to advertise something when you have no product to deliver anyway?? They are SOLD OUT for years to come!
I note that the above press release specifies that it is the Model X Performance that will do 4.4. It seems Elon misspoke when he said "and that's not even the Performance"?
@Brian H: I think that Elon's statement was in reference to the Model X prototype that the journalist had just ridden in. Check out the video at the bottom of this article:http://gigaom.com/cleantech/tesla-says-reservations-of-model-x-have-hit-...
The statement I'm referring to was during the reveal, when he said (4.4 seconds, and that's not even the Performance version" or SLT.
I notice, though, that the general X description still says "less than 5 seconds". So maybe 4.9 for Standard, 4.4 for Performance?
Oops, that "under 5 seconds" also now specifies the Performance. So we'll have to see what happens with those numbers as we get into 2013, I guess.
You're right, many, many people don't even know that Tesla exists, but I don't understand what they would accomplish by advertising now. It would waste money.
They should perhaps start some marketing after people start taking deliveries of the fisrt S's, and perhaps build off of the (hopefully positive) buzz of people who actually have used the car. However, even that would seem kind of a waste of money.
It would make more sense for them to start advertising towards the end of the year as they ramp up to a more normal production cycle in 2013. That's when they'll have to start attracting new buyers. Also, that way, they'll start building up brand power before they announce Bluestar, which will be marketed to a much larger population. They don't need to attract new buyers now, unless they're really desperate for more deposit cash.
@olanmills: They don't need to attract new buyers now, unless they're really desperate for more deposit cash.
Or they could have a flashy reveal of the next car to be released, which is basically 2 years off.
Oh, wait! They did that already. 8D
I believe there will be no advertising for several years. They will open their 8-10 new stores this year in key cities that will increase their exposure and offer free local puplicity which in turn will increase sales.
As far as I can tell, Tesla is getting lots of free exposure where it counts in these high-margin, low volume days: green blogs, auto blogs and financial blogs. Word spreads quickly.
I also agree with others that there's no point advertising for a car that they can't walk in the store, test drive, and drive home with it. No inventory; no physical experience.
I also agree with others that performance will out. The Roadster got tons of press, within the automotive world and beyond, for its achievements. The Model S and X are both breakthroughs in their segments of equal proportion. Perhaps even more so since they are even more practical everyday vehicles at a significantly lower price point. They have utility to burn (cargo volume) in their segments, not to mention competitive driving performance and style.
They are even getting press because of Fisker's restructuring issues with DOE. That isn't necessarily great press, but by comparison, they've made all milestones, already have one successful model (Roadster), and everything points to a bright future and a practical guarantee that they will be able to draw down the rest of the DOE loan and be able to pay it back, all on schedule.
Don't forget that "Powered by Tesla" logo on the dash of the RAV-4 EV. That will get Toyota customers' attention. I'm sure Daimler will do a similar thing.
The tech, the looks, the audacity, the story...I would not be surprised if Tesla doesn't have to resort to standard advertising until Gen.III production outstrips reservations by, say, 2017.
To add to one of my points, if Tesla continues to be successful, they would become a de facto poster child for the DOE loan program. A startup. An American automaker. Almost everything made and sourced domestically.
I know things don't always work out like they should, but I can't help but smile at Tesla Motors. If they fail, it will be their own doing, not competition, nor gov't policy shifts.
Sorry, one more thought - forgot a major point of "free" advertising: the GenIII Bluestar absolutely mustmustmust be called the Model T.
It plays on American auto industry pride (Ford Model T), it'll be the first excellent EV for the masses (as was the Ford Model T for any type of "horseless carriage" in the US), and the T also stands for "Tesla".
That would be a strategic marketing coup without a penny of advertising, in my opinion.
@Tom A: That would be epic. I wonder what, if any, legal protections Ford might be able to use to try and stop them? I cannot imagine Ford just rolling over and letting Tesla do that.
I think it really depends on how quickly sales go up as a result of getting the S on the road. If sales exceed the 20k they say they can produce in a year with their current work force, then not yet. If the sales are under that, then yes, but certainly not until the wait is shorter.
They should definitely begin advertising before reservations drop too low because Tesla's locations are stores rather than dealerships -- I don't see how they could keep lots of stock on hand (if they do, it won't be the same way traditional dealerships do). This may or may not happen before bluestar. If they aren't by then I certainly think that they should advertise bluestar.
"the GenIII Bluestar absolutely mustmustmust be called the Model T."
I hope when/if they announce it, the forums will have an easy way to filter the angered posts about having to get it in black.
@Tom A. I guess great minds think a like. I said the same thing to my husband last week, that it should be the Model T.
hope that means Tesla is also thinking along the same lines
Maybe Ford would allow them to call it the Model 2T?
@phb: I have often wondered about legal ramifications. Copyrights have limits (75 years?), and trademarks have limited lifespans, as well. However, trademarks may be maintained indefinitely if certain criteria are met, including the continued use of the trademark. The Ford Model T went out of production long before any of us were born. So, would, or could, Ford have maintained a trademark on "Model T"? I don't know.
I do know that there is legal precedent, at least in the US, for some of those intangible things like brand recognition.
For example, "Coca-Cola" has been around as a brand, and a company name, for generations. Even if every legal protection (copyright or trademark) may have expired for whatever reason, no other company may have the name "Coca-Cola" nor brand a product "Coca-Cola", regardless of whether the products are carbonated beverages or satellites.
It is very possible that there may be sufficient legal protections to prevent Tesla Motors from naming any model "Model T" under trademark law. If so, I wholeheartedly agree that Ford would pursue any and all legal avenues against TM, and TM would be savvy enough not to waste money on it if the outcome of any legal action is fairly obvious.
Actually, I just looked it up online on the USPTO website, and "Model T" is a "live" registered trademark of Ford Motor Corporation.
So, no, it's pretty clear to me that TM can't use it. Good for Ford, tough luck for TM.
How about the TM model TEA.
Where TEA stands for Tesla Electric Automobile.
This might be best as a new topic under the General heading...something to the effect of what the GenIII sedan (and CUV, I presume) should be called.
I think the next verssion will be the E model (enonomy)
You can choose the sedan, economy, or crossover. ; p
Why stick with letters? The Model 3!
"Any color you want, as long as it's not black!"
I think we all know Tesla is not good at naming things. Don't encourage them!
If we are going to sell the 4th generation car in China, it should be code named red star.
Model T2, and get Arnold to flog it as a Termintor :P