Brand Extension

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Brandextension is an effective marketing strategy that aims at improvingthe sales of several products and services offered by a company. Anestablished brand name is used to market the different products ofthe firm. Brand extension is significant because it improves brandequity, which implies the organization net-worth is attributeddirectly to the established name (Sichtmann &amp Diamantopoulos,2013). The paper explains how the brand extension is planned,implemented, monitored, and reviewed in one of America’s top autocompanies. Tesla, Inc. uses the established Tesla brand to enhancethe sales revenues from diverse products and services for example,cars and energy storage. Emphasis is placed on how the Tesla brand isused to market the modern electric car brand, the Tesla Model S.


TeslaModel S was introduced to the American and international automobilemarket by Tesla, Inc. in 2012. The marketing plan is developed basedon the automation, safety, and energy efficient trends in the currentautomotive industry. The marketing plan covers all the criticalissues and strategies required for the introduction of a product andservice in the auto industry. Market research is important in theplan. Tesla Model S was developed to cater for the huge demand forsmart cars by the high net-worth youths (Consumer Reports, 2017).There is also a huge demand for smart automobiles in emergingeconomies of Asia for example, Hong Kong, South Korea, andSingapore. The plan indicates competition. Major car brands aredeveloping innovative cars globally. These organizations includeAmerica’s General Motor’s and Japan’s Toyota. The keystrategies for implementing the plan are trade shows and advertising.The company has shown the car in motor shows in major cities forexample, London, New York, Hong Kong, Dubai, and Berlin. Tesla ModelS is also advertised frequently in the social, print, and mass media.The budget for developing and introducing the innovative car wasdeveloped and approved by the Board of Directors of Tesla, Inc. Themain marketing goal is the supply of luxury product to customers whoprefer auto cars that are energy efficient, comfortable, and havehigh safety levels.


Marketingresearch is critical in understanding the needs and expectations ofthe established and potential customers in the automobile industry.The research provides more information that is required by engineersto enhance the performance of the car model. The market research forthe new car product was a simple process because the targetedcustomers are aware of the high-performance standards of the Teslabrand. Focus group was effective in providing important information.Various industry stakeholders were given the opportunity to presentideas that can improve the performance of the innovative car. The keyoutcome of the focus group discussion is superior autopilot. TeslaModel S has ultrasonic sensors that provide a buffer zone around thevehicle. The technology improves safety because it enables the car toidentify road signs and obstacles. One-on-one interviews withautomobile engineers enabled Tesla, Inc. to develop the innovativecar product. The engineers provided important information fordevelopment for example, the development of the superchargerstations to provide clean power for the vehicle. Test marketingprovided useful information for the research. Select customers weregiven the car to determine its effectiveness in the areas of speed,comfort, energy efficiency, and safety. All the research participantsprovided information that improved the performance of the final TeslaModel S product (Möller &amp Parvinen, 2015).


Tesla,Inc. has adopted several pricing strategies to sell the Tesla Model Sproduct. The pricing of the car ranges between $72,700 and $110,700(Consumer Reports, 2017). The price varies depending on the installedfeatures and country of purchase. The price ensures profitability ofeach unit sold, and also increases the sales revenue from the productline. The pricing is fair for the targeted customer base, which isthe high net-worth individuals in developed and emerging economies ofAmerica, Asia, Middle East, and Europe. The sales team of Tesla, Inc.adopted the absorption pricing method that ensures profitability bycovering all the costs associated with the development, marketing,and supply of the Tesla Model S car. The total costs include variablecosts for example, the distribution and advertisement expenses invarious countries. Fixed costs are also considered for instance, thecost of manufacturing each unit of Tesla Model S (Möller &ampParvinen, 2015). The company also uses price skimming strategy tobreak-even. Fewer sales of the Tesla Model S product are required toachieve the financial break-even point where total sales revenueequals total costs associated with the product. It is projected thatthe company will reach the break-even point within three years. Inthe United States market, the company has adopted the keystonepricing strategy. The retail price used by car dealers is set byincreasing the value of the wholesale price at the manufacturingplant. The various pricing alternatives aim at setting a fair pricethat overcomes competition from other car manufacturers who produceluxury products.


Thestrategy describes the method Tesla, Inc. has adapted to supply theTesla Model S vehicle to the customers. The company uses the directchannel. The customers contact the sales staff of the companydirectly using email, telephone, social media, and websitecommunication (Möller &amp Parvinen, 2015). Details of payment areprovided, and the product is shipped to the customer. Customers canalso visit the showroom of the company and purchase the carimmediately. Indirect channels that involve intermediaries are alsoused. The company supplies the cars to various dealers who sell tocustomers.

SalesManagement Plan

Thesales management plan aims at raising sales revenues andprofitability through offering high-quality products that achieve theneeds of the customers. Sales management involves determination ofsales goals and strategies, allocation of resources, implementationof the strategy, monitoring of performance, and evaluation of salesresults (Möller &amp Parvinen, 2015). The sales goal of Tesla ModelS vehicle is to enhance the revenues received from the Tesla brand.The resources important for achieving the plan are human, financial,technology, and facilities. Human resources involve the sales andfinance professionals who handle customers during sales. Finances areused for paying salaries and expenses like advertisements andlicenses. Technology like the internet improves communication betweensales representatives and customers. Facilities such as showrooms areimportant because they are used to display the performance featuresof the vehicle to the customers. The sales results are evaluatedusing financial statements for example, the trading, profit, andloss accounts. Increasing sales revenues and profit levels indicatethe success of the sales management plan.


TheTesla brand has global recognition. Therefore, developing a luxuryvehicle product under the brand generates sufficient excitement andinterest from key stakeholders in the automobile industry. There is ahuge demand for the Tesla Model S product because customers associatethe Tesla brand with high performance, cost-effectiveness,innovation, safety, and clean energy.


ConsumerReports. (2017). Tesla Model S. Retrieved from

Möller,K., &amp Parvinen, P. (2015). “An impact-oriented implementationapproach in business marketing research: Introduction to the SpecialIssue on Implementing Strategies and Theories of B2B Marketing andSales Management.” IndustrialMarketing Management, 45,3-11.

Sichtmann,C., &amp Diamantopoulos, A. (2013). “The impact of perceived brandglobalness, brand origin image, and brand origin–extension fit onbrand extension success.” Journalof the Academy of Marketing Science,41(5), 567-585.