Chapter# 14: Marketing Channels and Retailing

Tesla is creatively using marketing to upend the auto industry business model:

• There are no Tesla dealers
• There are no commissioned sales people
• Tesla cars are marketed and not aggressively sold
• Tesla transactions are conducted online
• The price is the price: no negotiation
• There is no inventory: the Tesla Model S is built to order
• You can’t test drive a Tesla unless you put down a $5,000 deposit
• In many parts of the country, you can’t see or drive the car before you buy even if you place a deposit
• You have to wait in line for months or years to get a car

And the marketing challenges are incredibly difficult:

• They are building a new luxury brand from scratch
• They are evangelizing a new type of vehicle: an electric car
• They are selling a $60,000 – $100,000+ car that can’t go on a road trip
• They must sell an entirely new model of buying and owning a car

So what can we learn from Tesla marketing?

(1) Start with a great product 

(2) Start high and work your way down 

(3) Turn auto industry strengths into weaknesses

(4) Create a new multi-channel model

(5) Build the community & focus on the experience

(6) Leverage the media and traditional press

Tesla Marketing: Likely more lessons to come

While it’s early and many many risks remain, Tesla is the first company to have the potential to become the Apple computer of the car industry. Like Apple, they are selling a product that is very different than what has come before. Both companies focus on great products and innovation. They are both building their own ecosystem (Tesla’s super charger network is akin to Apple’s build-out of iTunes and the Apple Store) and both are challenging traditional sales models with their own direct distribution system. In fact, Tesla hired Apple’s previous retail chief to build out the new distribution model.