Tag Archives: product positioning

Tesla is Now Spending on Advertising

Times are changing. Habits evolve. Products adapt. And, what worked in the past might not work today.

Here’s an example: Tesla has long avoiding the costs of advertising in any traditional way. Its own CEO, Elon Musk, has stated that he hates advertising. To date, Tesla has depended on its own social media accounts, consumers’ social media, stores, press coverage, and strong word-of-mouth branding. Plus, Elon Musk has access to a very large social media platform/followers and uses it to the company’s advantage.

But, Musk has changed his mind and spent about $6.4 million on digital advertising in the U.S. in 2023. While this is definitely an uptick from spending of only $175,000 in 2022, it pales in comparison to other automotive companies’ spending. For example, General Motors spent $3.6 BILLION on advertising and promotion in 2023.

 So, where is Tesla advertising? Well, it is spending primarily on digital advertising on X (another Elon Musk company), Facebook, Instagram, and YouTube. Tesla has also bought Google search ads. Current Tesla advertising focuses on family and safety – this repositions the company from a sports car to family car.

And, why is Tesla advertising now? Perhaps it’s because its stock price is down, growth has declined, and competition has increased. Some of its ads even included promotional pricing to lower the cost of buying.

What do you think?

Group Activities and Discussion Questions:

  1. Poll students: How has Tesla historically marketed its vehicles?
  2. Why is Tesla now advertising?
  3. View Tesla YouTube ads: https://youtu.be/L2fticPH-to?si=6Q4zwI6gXHaHryLh  
  4. View Tesla ads on X: https://twitter.com/Tesla/status/1770846108098375680?s=20
  5. Poll students: Who has seen an ad for Tesla on any of their social media feeds?
  6. Discuss the Product Life Cycle (PLC) and how advertising is used at each stage.
  7. Have students draw a PLC and place the EV industry. Then have them place other automobile companies.
  8. Given this, have the teams develop a marketing program for Tesla.

Source: Haggin, P. & Coffee. P. (29 March 2024). Tesla dives into advertising after years of resistance. Wall Street Journal; Kafka, P. (5 March 2024). Elon Musk has a unique plan to solve Twitter’s ad problems. Business Insider; Quiroz-Gutierrez, M. (29 March 2024). Tesla scraps Elon Musk’s no-advertising mantra as stock nosedived nearly 30% this year. Fortune.

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Plant Milks Keep Growing

What is your favorite milk drink? And, no, we don’t mean do you prefer skim, 1%, 2%, or whole milk. Because today there are more “milks” available to consumers than just dairy milks.

There are numerous plant-based milks available made from various nuts, seeds, grains, and even vegetables. But the latest is one you might not be familiar with on your morning cereal – it’s a plant milk made from – wait for it – potatoes! The new potato milk is made by Swedish company Dug Drinks and is already being sold in Great Britain with distribution in the U.S. planned later this year.

Dug is far from alone as a non-dairy milk on the shelves and in coffee shops. With a growth in health-conscious diets such as vegan and non-animal food fare, the market has seen a proliferation in food and drink plant-based substitutes made from oats, almonds, cashews, flax seeds, and more. Plant-based foods are trending up as consumers gain interest in sustainability, health, and ethical practices. And of course the pandemic’s impact on supply chain also pushed people to try different products when their old reliable products were not easily available.

“Milk” drinks alone are a large category of products. Sales of plant-based milks in the U.S. were an estimated $2.5 billion at the end of the year, accounting for 15% of all retail milk sales and 35% of all plant-based foods. Repeat sales of the beverages averages 75% for a high level of retention. And, plant-based milk is one of the most developed plant-based food categories and is consistently shelved next to dairy milk.

Most plant-based milks are made the same way; the main ingredient is soaked in water, then pressed or blended into a puree. This is then filtered to remove particles, and additional ingredients may  be added to gain better texture and flavor.

However, the drinks also carry a political weight; the dairy industry had been petitioning the U.S. Food and Drink Administration to prohibit the  term “milk” label for all non-dairy products. And many drinks made from nuts can have adverse environmental impacts, particularly when water is scarce in communities. But, the category is quite innovative and keeps growing to offer additional plant-based drinks and foods.

Now that you know some of the options, what is your favorite milk?

Group Activities and Discussion Questions:

  1. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  2. Poll students: What are reasons for people to consume plant-based foods?
  3. Show a brief video about the rise of plant milk: https://youtu.be/yoAeuJlt7qo
  4. Have students use laptops to review various plant-based milk drinks.
  5. Oatly oat milk: https://www.oatly.com/en-us
  6. Dug potato milk: https://dugdrinks.com/
  7. Silk almond milk: https://silk.com/
  8. Ripple plant milk: https://www.ripplefoods.com/
  9. Divide students into teams and have each team develop a positioning map for a plant-based drink. What are the two axis labels they will use?
  10. What happens if the axis labels change?

Source:  Petersen, V. (28 February 2022). Have we reached peak plant milk? Not even close. New York Times.

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Pricing in the Entertainment Streaming Industry

The entertainment streaming industry is on fire right now. Apple, Hulu, Netflix, Disney, HBO, and more brands are ramping up to fight it out for the monthly consumer subscription!

Here is how the current prices compare between services:

Service Monthly cost Shows
Netflix $12.99 Stranger Things
Hulu $11.99 (ad free), or

$5.99 (with ads)

Handmaid’s Tale
Amazon Prime Video $8.99 Marvelous Mrs. Maisel
Apple TV+ $4.99 The Morning Show
Disney+ $6.99 The Simpsons
HBO Max $14.99 Friends

 

Notice anything interesting in the prices? How each price ends? Which vendor is using penetration pricing? Or below-competition pricing? Name a price model and it’s probably on the list above. Blockbusters, as well as all-new created movies and shows are all offered from multiple services and it can be hard to determine which has which. The marketing focus should be on differentiation – the services are starting to sound alike, and be priced alike.

There has been a dramatic shift in recent years about how consumers get their information and entertainment, and how many more consumers use streaming services each year. The average consumer in 2019 has 2.6 stacked services. This is up from 1.6 stacked services in 2016, but far short of the projected 4.9 staked streaming services by 2023.

Think about it… how many services are currently in your household?

Group Activities and Discussion Questions:

  1. Poll students: How many subscription services does each household have today? Add them and average it for the class.
  2. Show a video about the topic: https://www.wsj.com/video/video-streaming-services-battle-for-subscribers/AED37E41-E1EC-447A-A47F-C55D1834B7E0.html
  3. Pricing is usually a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  4. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  5. For these streaming services, divide students into groups and have each group work on setting the price level.
  6. Assign each team a different model to use (demand-oriented, cost- oriented, profit-oriented, and competitor-oriented) and have the team explain how the model was used when setting their price.
  7. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: FitzGerald, D., & Flint, J. (29 October 2019). AT&T lays out price, show line-up for HBO. Wall Street Journal; other news sources

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