Tesla Model S Market And Sales Strategy

Author : Eric Christopher Cahill
Publisher :
ISBN 13 : 9781339542447
Total Pages : pages
Book Rating : 4.5/5 (424 download)

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Download or read book Distribution Strategy and Retail Performance in the U.S. Market for Plug-in Electric Vehicles written by Eric Christopher Cahill and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: From a marketing and sales perspective, plug-in electric vehicles (PEVs) are very different from conventional gasoline and diesel cars. They are also very different from prior advancements in automotive technology. PEVs hold distinctly different value for customers, entail material changes in consumer behavior and require new support infrastructure on which customers must rely. New car dealers may be ill-equipped to sell these radically innovative new products, with potentially adverse consequences for PEV adoption. In this dissertation, I address the behavior of new car dealers as they face these new PEV products through the lens of product innovation, marketing strategy and retail performance. Marketing theory suggests that success in bringing radically different technologies to market depends on whether manufacturers can match an appropriate distribution strategy to the type of innovation being introduced. I examine the relationship between innovation form and distribution strategy by analyzing national new car buyer survey data from automotive research firm J.D. Power and by conducting a total of 43 interviews with automakers and new car dealers in California's core PEV markets. The analysis revealed a sizeable gap in the reported quality of the retail experience between buyers of new conventional cars and new PEVs. PEV buyers rated new car dealers much lower than buyers of conventional cars, and reported much lower intended loyalty to those manufacturers as a result. The big exception came from buyers of electric cars from industry newcomer Tesla Motors, a company noted for pioneering new approaches to selling electric vehicles. Tesla employs an innovation-specific distribution strategy featuring company-owned retail stores, service centers and charging infrastructure. In contrast to dealer-based sales, Tesla buyers reported much higher retail satisfaction and higher intended buyer loyalty. The research uncovered several factors that could explain observed disparities in retail satisfaction, including a steeper learning curve for dealer salespeople, low initial demand, questionable profitability and other substantive burdens on dealers. Consequently, many dealers may choose to forego opportunities to sell PEVs or to make PEV-specific investments in facilities, equipment or training that could lift buyer satisfaction with the retail experience. Pervasive state franchise laws further ban manufacturers from selling PEVs directly to customers and restrict options by which manufacturers might bolster the PEV retail experience through existing dealer channels. In light of these findings, I suggest a dual-path approach for policy aimed at mitigating distribution-related barriers by: (1) Aligning government-funded incentive programs with industry practices through more "retail friendly" policies that reduce uncertainty for dealers and end customers, and (2) Empowering manufacturers to pursue alternative market introduction approaches for distributing PEVs.