Tag Archives: transportation

Tesla Shifts Retail Strategy, Then Shifts Again

Tesla, Tesla, Tesla… It’s so much fun to track this company. Not only are the products innovative and exciting to follow, it is also a marketing case study in nearly constant motion.

Case in point: At the end of February the company announced it would be closing its retail stores in order to cut costs and lower the pricing of the Model 3 to make it more affordable (at a starting price of $35,000). Tesla believes that car buyers will increasingly rely on on-line ordering instead of physical stores. Tesla stated that in North America, a customer can buy a Tesla on their phone in approximately a minute. Which begs the question, just because customers can do this, will they do it?

However, two weeks later, Tesla reversed its strategy and stated it would instead keep most of its 378 retail stores and would instead raise prices of cars by 3%, excluding the Model 3 cars. Tesla hoped to cut costs by closing stores, but landlords, customers, car dealers, and lawmakers protested the closings. The stores will still function as a showroom and location for test-drives, but sales will still be done online.

Where do you want to stop for your next car?

Group Activities and Discussion Questions:

  1. Discuss the distribution model used by Tesla and compare it to the distribution model used by other automotive manufacturers.
  2. Here is an interesting video on why Tesla cars cost so much: https://www.wsj.com/video/the-secret-to-why-a-tesla-costs-so-much-hint-batteries/65F3A21D-0837-4DA6-B739-612124815603.html (Hint – it’s the batteries.)
  3. Poll students: How many would buy a car online instead of at a dealer/store?
  4. What are advantages and disadvantages of buying cars online only?
  5. Why has Tesla disrupted the traditional automotive sales model?
  6. Will other automotive companies follow the Tesla model?

Source: Wall Street Journal, New York Times, Assoc. Press, other news sources

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Product Lines Don’t Last Forever

Nothing lasts forever. It’s a tired phrase, but a true one, that is often applied to consumer goods. In the past year or so, two of the most ubiquitous consumer products that have been deleted include the VCR and the iPod. It happens in all industries.

In the automotive industry, some of the famous car brands that have been deleted in the past decade include Pontiac, Saturn, Maybach, Mercury, Hummer, Saab, Isuzu, Oldsmobile, and Plymouth. The most recent company to delete a car line (but not the entire company) is Ford. Ford plans to kill off its entire sedan lineup (except Mustang!). The company plans to delete Taurus, Fusion, Focus, and Fiesta – some of which have had high rankings and sales. Why cut the lines?

Strategically, Ford needs to cut costs and improve its overall financial performance. The company’s decision also seems to reflect changing consumer preferences for SUVs and crossovers, instead of traditional family sedans. Generation Y and Millennials are now starting families, but they still want to maintain an active lifestyle. This makes SUVs a popular choice. By 2020, Ford plans to have nearly 90% of its vehicles in the categories of truck, SUV, and commercial vehicles. And, let’s not forget about emerging demands for electric and autonomous vehicles.

Out with the old – in with the new.

Group Activities and Discussion Questions:

  1. Discuss the stages in the product life cycle. What are the marketing objectives in each stage?
  2. Divide students into teams. Have each team draw a product life cycle and place various products and services into each stage.
  3. Show Ford’s Web site: https://www.ford.com/
  4. Where do the various vehicles fit in the product life cycle?
  5. Discuss Ford’s cuts to its product lines.
  6. Have students brainstorm on how to reposition or revise products/services to that they can move into an earlier stage of the life cycle.

Source: Detroit Free Press, Brandchannel.com, New York Times, other news sources

 

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Delivery Direct to Your Car

Have you ever had a problem with delivery of packages? Have you been a victim of ‘porch pirates’ stealing packages before you get home? If so, then you may like the new option for Amazon’s in-car package delivery, placed securely in your trunk or back seat. The service is available to Amazon Prime members who have an active GM OnStar or Volvo On Call account in 37 cities across the U.S.

It seems pretty easy. Using an Amazon app, the customer inputs the information about their car (must be a 2015 or newer Chevrolet, Buick, GMC, Cadillac, or Volvo). For each order, the customer selects a delivery to their car, receives a notification when the delivery is on its way, and another notification after delivery is completed and door/trunk relocked. Delivery people use the car’s assistance services to locate the car and unlock it.

The car delivery service only works for vehicles parked in lots that are easily accessible. It won’t work for parking garages or gated communities. And, if you’re worried about damage to the car, Amazon even said that it will take care of a broken window or lock that happens as a result of the delivery.

Go ahead and order – there are a lot of delivery options, including porch, office, in-home, locker, and now, your car.

Group Activities and Discussion Questions:

  1. Discuss the topics of package delivery. Has anyone had problems?
  2. Show the Amazon information and video about car delivery: https://www.amazon.com/b?ie=UTF8&node=17051031011
  3. CNET video: https://youtu.be/8bZfZZJ7Q4Q
  4. Video of customer testimonials: https://youtu.be/w4akHn0jQCc
  5. Poll students: Would they use this service?
  6. Discuss the importance of clearly defining a target market.
  7. For in-car delivery, what is the target market?
  8. Divide students into teams and have each team develop a target market profile. Include demographics, psychographics, behaviors, values, attitudes, etc.

Source: CNET, New York Times, Wall Street Journal, Detroit Free Press, other news sources

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