Mark the date April 4, 2016 in your memory. At some point in the future, this date will have huge significance. Elon Musk is also likely to roll off your tongue with the same broadly shared recognition that the name Steve Jobs from Apple does. That’s because April 4th is the day that Tesla pre-sold 276,000 Model 3 cars worldwide, with an estimate to hit over 500,000 well before production even starts. Each person parted with $1,000 down payment on a $35,000 electric car that won’t even physically be available until late 2017. Other then photos, nobody has even seen one. They are however familiar with the very expensive high-end design savvy models currently coveted by many and driven by few.
Elon Musk has done to cars what Steve Jobs did to computing. He has disrupted everything. Although the existing premier Model S and Model X helped position the company as exclusive, no doubt the plan all along was for a major launch mid-market. In fact the survival of the company long term likely depended on it.
From a marketing perspective, the new Model 3 not only disrupts the existing automotive industry, it frankly blows it out of the water. I say that because it goes well beyond business, and enters the realm of economics, politics, and world power to have global energy not necessarily driven by oil. That shift now seems not only possible but also likely, with countries such as Norway and the Netherlands stating that they will prohibit the sale of gas powered cars after 2025.
Product: Tesla makes electric vehicles only. And the cars are the epitome of art and industrial design meeting German engineering. This isn’t a pet project on the side, like their other major competitors. Nor is Tesla tied into the oil companies like some of the large existing manufacturers. Tesla has also demonstrated that they intend to build out the charging network, further altering what they are actually selling. Is it a car, or a transportation system? Will you buy charges? Get them free with purchase? Buy an annual membership? Whatever transpires, it will no doubt shake up all products and services within the automotive industry – delivery of power included.
Price: Previously Tesla vehicles were for the rich, clocking in close to $100,000 Cdn. The new Model 3 will retail for $35,000 US, putting it squarely in the range of many existing vehicles on the market. Because previous Tesla cars have been seen as so high end, and the Model 3 promises to have the same design sensibilities, it is perceived as being premium by the masses. That really disrupts the existing price structure of competing electric cars. How do they position against price now?
Distribution: Their distribution model doesn’t rely on dealers, or a showroom necessarily for that matter. Tesla sells direct. To date orders are in person or online. Sample cars are on display in a small showroom and test drives can be booked. Not that that mattered to the 276,000 people who put a $1,000 down on one recently. Further demonstrating that even a showroom isn’t needed. Truly, the cars can be bought online and then delivered.
Promotion: Taking a page from Apple’s playbook, Tesla has become a darling of the media, garnering hundreds of thousands of dollars of free global media publicity, simply by being newsworthy. What print and online they do all oozes class.
So why should we care about this type of disruption? Beyond the super cool factor of the car, how it will potentially change industries, politics, economics and world order (that’s a lofty list!) it’s also just a great reminder that disruption represents both threat and opportunity.
How do you plan for disruption in your industry? And more importantly, do you take time to think about how YOU or YOUR business could disrupt and do things differently? Think the 4Ps – product (or service), price, place (distribution) and promotion. What of the four could you challenge or change from accepted convention? Perhaps you can disrupt multiples. Lots to think about for sure – but that’s the way tomorrows leaders are thinking today. What about you?