Why Tesla can avoid spending marketing expenses? / Part 1

This article is inspired by " 13 Unique lessons every founder should learn from Tesla's Marketing strategy ", which discusses 13 reasons why Tesla can't spend marketing dollars.

Here, I will first analyze the reasons why Tesla (currently) does not spend marketing expenses, and why it is difficult for other car manufacturers to replicate such a model, and discuss these 13 reasons in the next article.

The paragraphs marked with "citation style" in this article are excerpted from the original text, and the rest of the content is my opinion.

Before you start, you need to know a few prerequisites:

Tesla boss Elon Musk is already a legend; Tesla is also a company known for its innovation and vision.

So his moves are not necessarily useful to you and other companies, but they can be used for reference.

Automakers Volkswagen (VW), General Motors (GM), Toyota, and BMW spend a total of more than $30 billion in advertising each year, while Tesla is zero.

This is Tesla's advantage, $30 billion (or a few billions on average) can be used to do a lot if it doesn't have to be spent on marketing.

two pools

However, this direct comparison is not fair; although the products are all cars, these traditional car manufacturers have been fighting in the same small circle for a long time. As long as they do less marketing, they will soon be squeezed out by competitors with high homogeneity. And Tesla, because of its homogeneous opponents, is not yet a climate, and it is the king in a small circle. Naturally (relatively) it does not have to spend this kind of money that must be spent to "keep afloat".

Another factor is that Musk has several businesses that are forward-looking, successful in technology, and incomparable in visibility, such as SpaceX , which has launched rockets and can be successfully recovered; these are all complementary in technology, marketing, and commercial markets. 's business.

Maybe you will think that this is easy to say, as long as the rich car manufacturers also invest in rockets, etc., they may not get the same effect, right?

In my opinion, it's a matter of cause and effect. If Toyota also engages in rockets and successfully launches and recycles, of course, it will have a certain marketing effect; but with Toyota's product and corporate nature, it is unlikely to do such a thing. Even if some achievements are made, it may not necessarily be good for the industry Multiplying effects, so betting on product development and marketing is a safer choice.

Can cheaper electric cars "beat" Tesla?

On this point, a recent piece of news that featured a speech by the CEO of General Motors "How to beat Tesla?" GM CEO: Make a Cheaper Electric Vehicle” , in fact, it clearly illustrates the attitude of traditional car manufacturers, as well as the concept and direction of marketing:

GM, which has a big business and a good relationship with the government, has a lot of tricks outside of making cars, and can beat Tesla in market share, but Mary Barra believes that customers who have been very loyal to the GM brand for many years will still be able to switch runways. Prioritize GM electric vehicles, so the existing Chevrolet and GMC truck customer base to repurchase electric vehicles is enough to beat Tesla.

Here's my take on this:

Making cheaper electric cars can make things like electric cars more popular, but it doesn't necessarily "beat Tesla". These are two different things.

Tesla's success is not because they "make better cars through electrification", but from the perspective of "Tesla's car is a mobile phone that can run".

For example, the architecture of Tesla’s products reserves a lot of room for upgrades through software and the Internet (= optional items that can make money), and it also completely overturns the “engine + transmission + fuel tank” architecture of the car, creating a “car of the future” Established the first feasible and commercialized model; if traditional car manufacturers cannot do this, they can only stay in the thinking of "cheaper electric vehicles".

(Compared to traditional cars, Tesla's disadvantage is that charging speed and location are still limited by many, and it is not as common as traditional gas stations; however, this problem is the same with any existing electric car brand.)

To beat Tesla, the point is to have a better design and usage paradigm, or to do better than them at the same paradigm, and to be equally competitive (not necessarily cheaper).

Or, using the same logic, see if the statement "make a cheaper phone can beat the iPhone (or Samsung, whatever)" makes sense.

Tesla mode can try to replicate, but the threshold is too high

For the topic of "marketing expenditure" in this article, because of the differences in market management perspectives, even if GM (or China's low-cost manufacturers) does make electric vehicles with good quality and lower prices, it can also grab a certain market share, but Marketing costs will still be spent (and probably more than they are now), given the nature of the market.

The reason is simple:

• Even if GM makes a low-priced electric car, it is still not necessarily able to jump into the new pool where Tesla defines the rules of the game, and it may not necessarily be able to beat the opponent with the opponent's game rules.
• The main competitors of GM's low-cost electric vehicles are still traditional car companies such as Toyota and Volkswagen in their own pools; and these manufacturers will also make products with similar positioning, and the competition will only be more intense than now. Because, even if you can't jump into Tesla's pool, you must be able to be king in the original pool.

Epilogue

Therefore, as mentioned above, in theory, there is no model that cannot be copied, but in the case of Tesla and other car manufacturers, the cost of copying the Tesla model, regardless of the nature of the company, culture, environment, and product characteristics. Look, the cost is too huge, and it may even "shake the country"; this is something that the relatively conservative traditional auto industry is unlikely to try.

Moreover, even if the model is successfully replicated, the market outcome will not necessarily be successful.

So, to beat Tesla, or at least force them to start spending serious marketing dollars, other automakers must be willing and able to create products and business models that surpass Tesla and change the rules of the electric vehicle industry for the past decade.

Similar situations have not happened. Changes in product design concepts, positioning, and environmental conditions (such as the oil crisis in the past) have allowed Japanese cars to replace American cars in the international market, and even contributed to the rise of Korean cars in recent years. Words can explain.

If traditional car manufacturers do not understand this point, perhaps the emergence of low-cost electric vehicles can make oil cars phased out a few years earlier, allowing car manufacturers to transform and survive, and market share (relative to slower opponents) can be increased; but don’t forget, Trends like this will also help Tesla...

...and people may not have to spend marketing dollars yet, you still have to keep spending.

(please look forward to the sequel)

This article was originally published in the " Uncle F's Hardcore Marketing School " e-newsletter, welcome to subscribe .