Marketing Plan Tesla Motors Sample

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Marketing Plan

The marketing plan of Tesla will be a pragmatic look at their overall performance in the automobile industry. The company has been a successful one in the USA but also in other countries of Europe. In this column of the marketing plan, we will be taking a look at the company’s present performance and other aspects of the marketing plan.  The marketing mix is very important for the company as it will reflect on the four important factors that the company has to take into account while framing the marketing plan for a new market (Acha et al. 2011).  Before we go off to this topic it is very important for Tesla to know the exact market structure of the automobile industry in India. The different strategies are effective for the framing of the plan.  The company has already designed effective electric cars for different regions and different climates and soon plans to drop in India its exclusive range of products. The Tesla Roadster has been one of the useful products that the company has produced, but the company plans to build and bring a long chain of useful cars that would serve different segments of consumers with different products in India (Binkiewicz et al. 2008). The company has planned to launch a range of affordable family cars which would effectively serve the purpose of consumers in India. The company has to effectively indulge in different plans and models to see their strengths and weakness as well as its opportunities and threats in India.  The Company Tesla Motors aims to expand its business in the Indian market as it brings opportunities to the company and also opens up prospect areas for the company. Hence, it is very important for the company to set its strategic goals and objectives that would suit the company’s future plans in India effectively (Bohnsack et al. 2014).

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SWOT Analysis

The SWOT analysis is a tool that will help Tesla to effectively find out its strength, weaknesses, opportunities, and threats in a new market. The USP of the company is electric cars. Though it is not possible for everyone to afford electric cars but it immensely helps the environment as electric cars do not involve gasoline.

Strength: The strength of the company lies in the fact that it does not sell fuel-enabled cars and has rather gone completely electric. Most of the markets have embraced this kind of car as consumers have become much more inclined to save the environment. Though the company sells electric cars but has still offered people sporty and luxurious designs which would not only give them a satisfactory feeling but also make them brand loyal. The Roadster is the first designed fully-equipped electric sports car in the world (Carlson et al. 2013). This makes them a very important entity in the entire automobile industry. In the last few years, the company has become famous for producing some extraordinary automobile products for many consumers. The company is also a supplier to the car manufacturers like Toyota.

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The strengths of the company will effectively help the company to expand its business to different markets especially in the Indian subcontinent. The Indian market is an open market that is easily accessible, thus it will enable the company to work on the market and plan effective marketing campaigns that will generate substantial traffic for the company (Fleming et al. 2013).

Weakness: With merits coming into play for the company, weaknesses get highlighted very quickly which can harm the overall performance of the company. First of all, as the company takes care of every stage of the design process of cars which also involves assemblies and sub-assemblies the cost of production gets very high and creates problems for the company (Hawkins et al. 2012). The risk of high cost is a significant problem as it will naturally tend to increase the Apart from this one of the crucial weaknesses of the company forms to be its product price that will affect the sales and revenue of the company in every market. Especially in India, it is very important for the company to frame its pricing for the effective selling of the products in India.  Electric cars have not found too many supporters of this yet as people are still inclined to use fuel cars for them. Hence, this becomes very important for the company to regulate its pricing as combustion-powered vehicles are still preferred more by the consumers.. Overall the company has to mitigate the problems of weaknesses so that it could work on its business and expansion programs efficiently (Karamitsios et al. 2013).

Unit: 7 – Business Strategy

Opportunities: Though Tesla has some weaknesses still the company has some opportunities as well which will help the company to capitalize on them and grow its business. The opportunities have enabled Tesla to think big for the new markets. Indian market is a big market and almost every foreign business wants to experience the Indian market. Tesla could utilize its opportunities and capitalize on the Indian market. The opportunities which could make Tesla a strong contender in the Indian automobile market could be discussed as follows:

The company’s tagline or slogan “Burn Rubber not Gasoline” is perfectly supporting their movements to support a friendly environment and efficient cars. Hence, it can be said that the company is the epitome of an environment-friendly company (Kempton et al. 2005).

Secondly, the company not only plans to stick to its present products but also diversify the product base which will help them to promote its business in different markets. Especially in India Tesla has to design effective products for example family cars and more SUVs so that the growing need f the Indian market could be solved. The company has already planned to diversify its product base with the focus of getting closer to its target consumer base. This opportunity will help the company to effectively meet its objective of getting closer to the consumers especially in a larger market like India where the competition is very tough and manoeuvring way to success is really hard.

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The company is very particular about its quality control process and that’s what will bring the company closer to its consumer base. The quality control management in Tesla is very tough and it follows the total quality management procedure for an effective quality control process. The company focuses more on the effective control process through monitoring, assessing and receiving feedback from the quality control department which helps the company to efficiently handle critical procedures of quality management (Mangram et al. 2012). The system of quality management is completed by auditors and the entire process brings out favourable outcomes that help the company to work on the drawbacks exposed after the quality management. The significance of quality management lays in the fact that it allows the company to make future plans to develop its overall procedure of design, control, and assembling car accessories. Hence, it could be said that quality management is an opportunity which the company should cash on markets like India.

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Threats: Threats emerge when something very quickly grabs the attention of consumers. Tesla is the first company to make fully equipped complete electric care. The concept is not that new and relatively old and many companies have already taken up the concept of the electric car which has become a threat itself for the company. For Tesla, there are different threats which if not faced with efficient ideas could really affect the business and the overall growth and development of the business is also threatened. Hence, it is important for the company to effectively evaluate its threats and mitigate them to continue to perform (Martin et al. 2014).

The company wants to target the average customers which are not possible given the business model of the company. The company has to be more precise in target setting and if possible they have to be extremely efficient in revamping the structure of the business which will help them is so close to their target. The pricing strategy of the company is very unique and hasn’t been used in the automobile industry which makes it very vulnerable in this extremely competitive market. The price strategy of the company is basically based on skimming (Morrish et al. 2011). Tesla offers a high-value proposition to the consumers. The main drawback of the company is it doesn’t have any high or low pricing strategy. It has become controversy because if the price of Tesla cars is compared it is very visible that normal combustion engine cars are much more affordable which makes the buying call pretty difficult.

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Hence, it could be said that Tesla Motors have to be always at their toes in facing the challenges so that the company could effectively mitigate the above-discussed risks to set their foot in the Indian market (Morrish et al. 2010).

The SWOT analysis reveals that the company does have some strengths and opportunities that could be effectively utilized by the company to work in the Indian market. The threats and weaknesses have to be mitigated and addressed so that it does not face any kind of problem while operating in the Indian market.  With the efficacy of the SWOT analysis, the company will now move on to an effective marketing mix which will help the company to frame an effective marketing plan.   

Marketing Program

A marketing mix is a crucial tool that would help the company to focus on the different attributes to expand the business in a new market. Hence, it is very important for the company to organize an effective marketing mix that will highlight the crucial aspects of marketing namely products, promotion, place, and pricing.

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Product

The product is the ultimate requirement of the consumers. Tesla needs to understand the significance of every situation which will help the company to place its products effectively. The company produces sleek and sporty electric cars and still has strong competitors in the form of Toyota, Honda, and other companies who are designing the same types of cars (Nigro et al. 2011). Tesla’s product is mainly high-end electric cars which are built for orders and customized electric cars for rich clientele. Tesla cars are well built through efficient automobile engineers who are effective think tanks who have huge experience in this field. The cars are built to be aerodynamic and have and latest mechanism in them that drives consumer attraction very easily. Tesla is very efficient in designing sedans and SUVs which are spacious in nature and provide the best comforts for the users. Tesla cars do have different torque powers which make them unique in their class. The car speed normally ranges between 130miles per hour to 150miles depending on the mechanism of the car especially the battery system the car uses. On the other hand, a car can reach up to around 55 to 60mph within 6 seconds which is the best that an electric car can produce. Tesla cars are snazzy in their looks and come with great features which instantly attract consumer attention.

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In the context of the Indian market, the company has to be very clever in order to position their products as there is a huge competition for this company and each and every one of these companies tries to outplay each other (Rothaermel et al. 2012). For instance, Nissan Motors came up with different car models with improvised features but they failed to make a mark as most of the consumers relied on brands like Tata, Honda, Maruti Suzuki, Hyundai et cetera.  Hence it is very important for Tesla to make cars that will have to be a competent product that plays at par with these companies. This can be further explained in a simple way that is the company has to produce cars which can be run in the Indian condition and most importantly will give fair mileage. Tesla’s original product Roadster is a classic but the company has recently launched the Model S which is an SUV and serves its purpose effectively. Tesla is planning to launch this in India along with a family car which will help the average section of India. Apart from these options, the most convenient option that the company gives is its sedan. There are three types of sedans depending on the battery power. 65kwh battery, 85kwh battery, and 85p battery are three different options to choose from (Shirouzu et al. 2009). They are the indicators of speed and mileage for the cars. In India, Tesla would like to do something like this that would help them to serve different sections of people.  The same class of cars based on combustion mechanics would suffer loss as most of the consumers will prefer this kind of product and choose Tesla. There is a certain class of wheel-loving people who like to try different items and it Tesla cars would be perfectly suitable for them at the present moment. Hence, it can be said that the products strategy of Tesla has to be very effective and smooth in order to grab the Indian market.

Marketing Plan Tesla Motors Sample

                               Fig1: Market Penetration Tesla (Trop et al. 2014)

Price

The pricing strategy is a very crucial aspect of the marketing mix as this ultimately motivates or reciprocates the feeling of buying a particular item. Tesla follows a unique style of pricing which is called price skimming. Normally the price range is selected by the buyer but depending on the level of customization the price is fixed. The kind of battery the customer chooses is the biggest indicator of price (Trop et al. 2014). Though the pricing strategy of the company remains to be on a higher side still given the mechanism of the country and the quality of automotive justify the price of the cars. In this case, it is important to mention that this company has to be very particular about the kind of price it sets for the Indian market. It cannot be set on a higher side if it wants to serve the average class people even. In the case of the niche market where it has already made a name for itself would have to be effectively set depending on the configuration of the car it designs. The price of the cars needs to be kept reasonable so that even the middle-class people could get access to them which would broaden the market of Tesla in India and will help them to serve a huge market.  The competitors of Tesla in India do have good pricing strategies which have kept them on the hunt for a long time now (Wirasingha et al. 2008). Tata Motors one of the biggest Indian car sellers sells Tata Nano at the lowest price of around Rs 200,000 which can be considered affordable for Indian consumers and other cars ranging from low to high with a different class of cars around in the market. Tesla has to keep in mind in a new market like India price could be a huge factor for the consumers to accept the company and,  hence, they have to effectively set the price of the cars depending on the segment they are trying to serve.

Fixing price can be a tough job if the market is not studied properly and hence Tesla will have to consider its cost of making cars in India in other words it will have to assess the cost of opening manufacturing units in India.   

Promotion

The promotional strategies of the company will indicate how far the company can move in the context of existence in a particular market.  Promotional activities bring a company closer to its clients. So, it becomes immensely important for a company to have a compact promotional framework that will be followed by Tesla to advertise its products in the different markets of India (Wynn et al. 2009). In the present age, technology plays a huge part in the life of a human being so; the company will have to use the medium of technology to reach its targeted market. Tesla has to be careful in adopting the right strategy for the Indian market. With the huge competition around in India, they have to be careful about which strategy they adopt Push Strategy or Pull strategy.  In the given market situation a pull strategy would work in a better way for Tesla. Its concept of electricity is not new globally but in India, this has hardly happened hence, effective promotional campaigns would stimulate interest among the car lovers in India which will enable a rush of consumers making queries about Tesla cars. Apart from these, social networking is a very strong prospect for promotion as people all across the world interact through it and gather information. This comes in handy for any company selling its products and services. Ample information through Tesla’s website and other sites with the support of social networking will give the pull marketing campaign of Tesla a fresh lease of life in the Indian market (Acha et al. 2011). This will help to convey information faster and inevitably results will come faster. The promotion mix works effectively for the successful promotion of the business especially it takes very little time to convey information and doesn’t cost huge as compared to other conventional promotional plans.    

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Place

The place is another important variable in the marketing program. Tesla is very particular about their sales of cars happening and in what locations they are happening. Consumers buy cars once they have thoroughly checked all the features of the cars. Tesla makes sure that they set their store locations in aesthetically beautiful landscapes where the consumers get goo vibe and also online which will help the consumer to choose from the wide range of cars in the inventory and see their configurations and then do the bookings. In India, Tesla could use both of the above processes and they will be favourable for the effective selling of cars. On the other hand, Tesla should think to open showrooms and galleries which will help them to exhibit a wide range of customized cars that consumers will like and plan to buy especially then car lovers in India (Binkiewicz et al. 2008). The place is a big determinant of sales as it influences the consumers either in a positive way or in a negative way. The distribution strategy will be paramount for Tesla to see success in the Indian market. The distribution strategy should focus more on the uniform distribution of their products in the Indian market. The company owns its own distribution channels which would help the company to effectively design the products and distribute them in a proper way. The company does not believe in having a large inventory to work in foreign markets. The company hardly works with the dealerships and rather focuses on selling cars through their own channel. Tesla works in a different way. It exhibits a single car in their showroom and once the client sees it they modify the car according to the choice for which the client has to wait. Tesla could work in the same way even in India but in some targeted markets it will have to keep more choices that will address the sceptical clients. In these sectors, the distribution has to be uniform to meet the client’s needs (Bohnsack et al. 2014). In the Present-day Tesla should start with the rich market where people want to spend money on cars and with slow and steady growth it can develop its business to reach the average class people. This will ensure effective product distribution to the targeted market and will help them to work in a better way.

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Financial projection of Tesla

The company has been able to generate good revenue with their first car Tesla Roadster and the figure is still rising. Based on this product the company has been able to earn huge revenue and sales figure has reflected an upward movement. In the previous financial year, the company has been able to sell around 20,000 units which are more than Toyota’s model of Prius, Chevrolet Ampera, and Mitsubishi Outlander in the Hybrid car section. If we see the financial position of Tesla Motors in recent time we will see that from the year 2008 the company experienced visible growth in revenue and sales. Tesla’s total revenue rose from $14.8million to $204million sharp. Hence it could be said that even if the company found resistance in its operations but its sales and revenue have been positive.  The below figure would help us to understand this statement (Carlson et al. 2013).

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The annual financials reflect that the company has gradually gained profit over the years. The below chart shows between 2012 and 2013 there has been a steep rise in the pretax income of the company which indicates that they have been able to sell a large number of cars in between these two years. It can be said with the given backup that Tesla has from its present business it will be able to effectively work in India. The company has been able to earn a good amount of revenue which inevitably develops the amount of net profit earned. The company will be able to invest in sites and efficient marketing done in India. The company involves a huge amount of money on research development which will be helpful for the company in this case. The company will require a significant amount of research which will help the company to develop its operations of the company. From the year 2010, the company has gradually increased their expenditure on research and development which slightly reduced in 2013. One of the reasons for this could be they have already understood the needs and wants of the consumers. Similarly, the company would be able to work on Indian markets with the ideas they have as the Indian market is an open market (Carlson et al. 2013).

Marketing Plan Tesla Motors Sample

                       Fig 2: Tesla Sales and Revenue 2015 to 2018(Bohnsack et al. 2014)

 

Growth & Valuation

Earnings growth (last year) -280.65%
Earnings growth (this year) -856.37%
Earnings growth (next 5 years) +30.00%
Revenue growth (last year)

Revenue Growth (next Five years)                +30.00 %

+58.85%
P/E ratio NM
Price/Sales 8.66
Price/Book 31.93

Fig 3: Evaluation of financials (Bohnsack et al. 2014)

The above financial projection shows that the company has a dipping curve but show an effective change in sales in the coming five years. The company will be able to gain a 30% positive increase in sales in the coming five years.  For the operations in India, the company will have to effectively frame financial projections which will help the company to work efficiently towards its goals.

It is also very important to see the coming five years’ financials for the effective launch of the marketing plans in India.

Years 2016 2017 2018 2019 2020
Cars sold (units) 250 300 450 500 650
Revenue ($) 125million 175million 10billion 12.5billion 21billion
Cost ($) 85million 125million 8billion 8billion 13billion
Profit ($) 40million 50million 2billion 4.5billion 8billion

Fig:4 financial projection of Tesla in India (Cunningham et al. 2009)

The above graph shows a clear prediction of the company’s plan of progress in India. Through this, an inference can be drawn about the future plans in India and how they want to pace their innings in India.

In the last five years projection of production, the company has focused on delivering 500,000 units of cars within the coming years till 2020 overall. This will help the company not only to effectively distribute its products in the existing markets but also in new markets in this context India.  The Below figure will help to get a fair idea about the five-year plan of Tesla’s production plan.

Marketing Plan Tesla Motors Sample

                   Fig5: Tesla Vehicle Deliveries within 2020 (Cunningham et al. 2009)

The company has already sold around 35,000 units in the last financial years which have given them the scope of framing this kind of long term projection which clearly indicates if the company can go along in a similar fashion they could get near to that magic figure mark of 500,000 units deliveries (Cunningham et al. 2009).

Organization

Tesla’s organizational structure is pretty simple and very complicated as they mean business. The company has no time to frame complicated organizational structures and which will make things tough. They want to design products for clients which are their main focus. The subordinates have the freedom to talk to any department and converse easily without prior permission from their managers though they report to the respective managers of the departments. The company follows a very simple hierarchy like CEO, CFO, and VPS and then followed by departmental managers. In order to work effectively in the Indian market, it is very important for the company to effectively design and manufacture cars which is only possible when the company opens up new business units in India. First of all, it will be cost-effective given the economy of India and on the other hand, it will also be able to design adaptive cars to grab the Indian market. For these units, the company will have to hire unit heads followed by departmental managers who will be in direct charge of the designing and manufacturing teams. This will in turn help the company to effectively run the operations and also progress in the Indian market (Fleming et al. 2013).

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Implementation plan

Launching a unit or diversifying a business in a new market is not that easy and takes time and research. Hence it was very important for Tesla Motors to effectively sketch out the marketing plan and related activities to meet their objectives in time. The timeline of the project will highlight the main events involved in the marketing. The initial part of the plan will reflect on the time consumed on the market selection to launch the product of Tesla which will involve research of around four weeks which is followed by an initial marketing plan design which will take place in the 6th week. The market selection of the company will include the selection of different favourable markets for the company. The company mainly focuses on the different big cities like Mumbai, Delhi, Chennai, and Bangalore which as these cities have a large population and are also economically forward which makes them a good market for any kind of business. Especially automobile market happens to be very high in these sectors of India as compared to the other markets as people are comparatively rich and the per capita income in these places in India are considerably high (Hawkins et al. 2012). The company will indulge in serious market selection which will be done through market surveys and thorough research that will enable the company to effectively choose its market for the business. Since the company is kind of comfortable doing business on its own it is very important for the company to locate places where the business could flourish. Tesla should focus more on framing the marketing plan in the allotted time which will include contemplation on joint ventures or lone entry. The company should focus on these markets as they are much more open to these industries. People in these markets are very much interested in investing in cars and buying good quality products. It is advisable that Tesla enters the Indian market in a joint venture which will help them to come close to the consumers so that Tesla products are easy to advertise (Karamitsios et al. 2013). On the other hand partner discussions and zoning and decision making will take place within the 10th and the 12th week followed by marketing mix planning and implementation which will be completed within the 20th week taking a span of 2months to complete the marketing program.  In the planning and the decision-making process, the company will involve in the decision-making process that is the different kinds of mediums that will be used for the marketing of Tesla cars. The implementation of the marketing plan will be effective when promotional strategies are used for the entire marketing process. Once the effective implementation is done based on the sketched it marketing plan it is very important that we are able to assess the plan that we have designed. The evaluation part is effective to see how the product launched is working (Hawkins et al. 2012). Evaluation of the first stage will take place when the first sales are made and it could be effectively implemented. In this stage, continuous monitoring and assessment will be done to understand the progress of the company and how it is fairing in the Indian market. Tesla will be effective in which will help them to make progress in the future. The sales and revenue will help to evaluate the scenario of the Indian market.

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Conclusion

The project revolves around the framing of an effective marketing plan for Tesla Motors. The main focus of Tesla would be to meet its objectives of working in the Indian market and serving not only the rich class of people but also the average class of people which will make them design condition-savvy cars favourable for the Indian consumers. The company will continue to work on the aspects of the marketing mix which will help them develop their overall marketing strategy making it easier of the clients to get access to the high-tech electric cars of Tesla (Karamitsios et al. 2013).

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References

Acha, S., Green, T. C., & Shah, N. (2011, January). Optimal charging strategies of electric vehicles in the UK power market. In Innovative Smart Grid Technologies (ISGT), 2011 IEEE PES (pp. 1-8). IEEE.

Binkiewicz, N., Chen, J., & Czubakowski, M. (2008). Tesla Motors.Unpublished document.

Bohnsack, R., Pinkse, J., & Kolk, A. (2014). Business models for sustainable technologies: Exploring business model evolution in the case of electric vehicles. Research Policy43(2), 284-300.

Carlson, W. B. (2013). Tesla: Inventor of the electrical age. Princeton University Press.

Cunningham, J. S. (2009). An analysis of battery electric vehicle production projections (Doctoral dissertation, Massachusetts Institute of Technology).

Fleming, B. (2013). Electric Vehicle Collaboration-Toyota Motor Corporation and Tesla Motors [Automotive Electronics]. Vehicular Technology Magazine, IEEE,8(1), 4-9.

Hawkins, T. R., Gausen, O. M., & Strømman, A. H. (2012). Environmental impacts of hybrid and electric vehicles—a review. The International Journal of Life Cycle Assessment17(8), 997-1014.

Karamitsios, A. (2013). Open Innovation in EVs: A Case Study of Tesla Motors.

Kempton, W. (2005, June). Vehicle to grid power. In NREL Analysis Seminar. NREL, Washington, DC (September 28).

Mangram, M. E. (2012). The Emperor’s New Clothes: A Framework for Market-Based Management at Tesla Motors. Journal of Strategic Management Education8(3).

Martin, C. (2014). Driving change in the battery industry. Nature nanotechnology9(5), 327-328.

Mohr, J. J., Sengupta, S., & Slater, S. F. (2009). Marketing of high-technology products and innovations. Pearson Prentice Hall.

Morrish, S. C. (2011). Entrepreneurial marketing: a strategy for the twenty-first century?Journal of Research in Marketing and Entrepreneurship13(2), 110-119.

Morrish, S. C., Miles, M. P., & Deacon, J. H. (2010). Entrepreneurial marketing: acknowledging the entrepreneur and customer-centric interrelationship. Journal of Strategic Marketing18(4), 303-316.

Nigro, N. (2011). Plug-in Electric Vehicles Market: State of Play. Pew Center on Global Climate Change.

Rothaermel, F. (2012). Strategic management. McGraw-Hill.

Shirouzu, N. (2009). Technology levels playing field in the race to market electric car. Wall Street Journal12.

Trop, J., & Cardwell, D. (2014). Tesla Plans a $5 Billion Battery Factory for Mass-Market Electric cars. New York Times.

Wirasingha, S. G., Schofield, N., & Emadi, A. (2008, September). Plug-in hybrid electric vehicle developments in the US: Trends, barriers, and economic feasibility. In-Vehicle Power and Propulsion Conference, 2008. VPPC’08. IEEE(pp. 1-8). IEEE.

Wynn, T., & Lafleur, S. (2009). A free market perspective on electric vehicles.Cascade Policy Institute. Portland: Oregon.

Appendix

Annual Financials for Tesla Motors Inc

Marketing Plan Tesla Motors Sample

http: www.nasdaq.com › Quotes › TSLA › Forecast Earnings Growth   

 

Earnings growth (last year) -280.65%
Earnings growth (this year) -856.37%
Earnings growth (next 5 years) +30.00%
Revenue growth (last year)

Revenue Growth (next Five years)                +30.00 %

+58.85%
P/E ratio NM
Price/Sales 8.66
Price/Book 31.93

 Fig 4: Five-year sales projection Tesla (Karamitsios et al. 2013)

 Project Timeline

Research Activity 4thweeks 6thweeks 10thweeks 12th Week 16th Week 20th Week
Market selection
Initial marketing plan design
Partner discussions
Zoning and decisions  

 

 

Marketing mix planning
implementation

Fig 5: Gantt chart Marketing

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