Consumer Behavior

Learning Goal: I’m working on a marketing discussion question and need an explanation and answer to help me learn.

Tesla Motors Driving Forward with a New Consumer Decision Journey

The consumer decision-making process is undergoing major change and will never be the same. Consumers are more informed than ever, with access to virtually endless information. But that wealth of information is leading to many distractions and frustrations along the path to purchase. What experts used to illustrate as a linear or funnel-like decision making path now looks more like a circular, looping journey where distractions often lead consumers to revisit information search and alternative evaluation, just when it seemed like a purchase decision should have been reached. Dr. Carl Marci at Innerscope Research says “the linear path to the register has been replaced with a roller-coaster ride that spans platforms and screens, through social media and traditional word of mouth.” In his blog, Nigel Hollis describes moving away from a consumer loop into a view of a “cloud of turbulent and sometimes conflicting influences” and points to Sue Elms’ suggestion that marketers need to plan for “meaningful coincidences” rather than targeting consumers at specific points on the path to purchase. Marketers must replace outdated strategies that are based on misinterpretations of the decision journey.

Today’s reality is the prevalence of consumers moving seamlessly back and forth between physical and virtual shopping worlds, while using a variety of devices across multiple channels. “The Path to Purchase: Tracking the Consumer Journey,” tells us that 67 percent of shopper journeys now start online; 65 percent of those journeys are purely mobile. Despite that, many consumers still feel a compelling connection to physical shopping for firsthand involvement with the product and the actual purchase. In this kind of an environment, marketers must find new ways to offer “frictionless” customer experiences, remembering that “every touchpoint is a brand experience and an opportunity to engage the consumer.

One company that has responded to this changing consumer decision journey is Tesla Motors, a manufacturer of high-end all-electric cars. Tesla Motors came on the scene in 2006, introducing its first vehicle, the sporty all-electric Roadster with a 200-mile range and a price tag of $100,000. The car won Time’s Best Inventions award in the transportation category. Following its unique purchase process, the company took orders ahead of time for the cars and went into production in 2008. In 2012 it introduced the new Model S electric luxury sedan and by the end of 2013 had sold 18,000 through a non-traditional channel structure, becoming the best-selling full-size luxury sedan overall in the market. The Model S won Motor Trend’s Car of the Year and was awarded a five-star safety rating by the National Highway Safety Administration. Next up, Tesla will be delivering the Model X, a crossover SUV. It has also announced the introduction of the latest version of the Model S, the Model S 70D, an all-wheel drive version with a 250-mile range and has plans to roll out a Model 3, which will sell at a price point of $35,000, appealing to a much broader target market. In 2015, Tesla expected to sell 55,000 vehicles overall, up 74 percent from 2014. So how has Tesla reinvented the consumer’s car buying journey? They believe they have overcome the notoriously frustrating process and created a new model of buying and owning a car through a customized, socially engaging buying experience. Their approach attempts to create that frictionless, engaging set of consumer touch points and experiences that’s so important. As pointed out by Paul J. D’Arcy, “Since people start (their decision journey) online, Tesla designed its process around online information, commerce and community.” This strategy emphasizes an engaging, content-rich online experience, using a corporate Web site and social media.

The Web site is clean and clear, but information-intensive and features a blog by Elon Musk, a majority owner and “lead product architect,” who has become the visible face of the company. Tesla also wants consumers to feel a personal, emotional connection to the brand—to be passionate about owning a Tesla and to want to share that passion with other consumers. It has made user forums and a user community important parts of the online experience. The company does virtually no traditional advertising; it relies more on creating fans of the brand who are willing to generate word of mouth excitement about the vehicles. However, keeping in mind the role that physical interaction with products can play, the company has introduced “tiny, brand-centric storefronts in upscale shopping malls.” These kiosk stores typically feature one vehicle and have a brand expert on hand. The stores are aimed at making the brand more accessible to the general public through high visibility, low maintenance outlets. The car design is so unique and compelling that consumers are drawn in while they’re doing other shopping and can ask questions without the high-pressure, commission-driven sales tactics typically associated with car dealerships. When consumers are ready to buy they place a refundable deposit online or they can arrange for a test drive by making a deposit. The stores have become a big part of the company’s advertising. As one observer said about consumers snapping pictures of the Tesla car as they drove by the store window, “That’s how cool this car is. You feel like you’re part of something bigger, a new age of motor vehicles.” In addition, the media have picked up on the buzz created by the brand, a lot of it through social media, and played their own public relations role in increasing awareness of the company and its vehicles.

Tesla is working hard to rewrite the traditional attitudes that consumers have about vehicles and the things they consider in the purchase process. The company’s consistent message is that it is building the best car ever, not just the best electric car. It wants to disassociate the company from the typical perceptions that consumers have of gas vehicles and their attributes—dirty, complex, unreliable, hard to maintain. In fact, Tesla service centers have white floors to emphasize the clean nature of the vehicles and the lack of mess involved in servicing them. Despite the unusual purchase process Tesla Motors has created (or maybe because of it!), the demand for its vehicles continues to outpace production, with buyers placing orders for customized cars well in advance of their production and receipt of the vehicle. It also continues to push forward with game-changing innovation—adding to its network of 2,000 car superchargers worldwide, working to perfect autonomous-driving technology, achieving better mileage range and safety features, and bringing the price of the vehicles within reach of more consumers.

How does Tesla Motors’ marketing strategy connect with the changes going on in the consumer decision journey today? Do you believe that they can be successful over the long-term with this kind of an approach?

The chapter lecture identifies three different categories of consumer decision making: limited, habitual, and extended. How does Tesla seem to view the type of decision making that consumers go through when they purchase their vehicles?

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