Tesla Model 3: Analyzing Direct and Indirect Channel Strategies

1 Direct and Indirect Channel Strategies; A Case of Tesla Model 3 Antwron Phillips Troy University Principles of Marketing MKT-3300-XTIB 23/T2 Dr. Akins Ogungbure November 03, 2023

2 Direct and Indirect Channel Strategies; A Case of Tesla Model 3 In marketing and supply chain management, the concept of distribution channels plays a crucial role in ensuring that products reach consumers efficiently (Khan, 2020). A distribution channel involves the path or route through which products and services move from the manufacturer to the consumer as the end user. There are two main types of distribution channels namely; direct channels and indirect channels. Direct channel According to (Khan, & Ozturk, 2021), direct channel refers to a distribution process inch products move directly from the manufacturer to end user also known as the end consumer without the influence of an intermediaries. Direct channel as an approach provides product manufacturers greater control over the product, branding, and customer experience. However, it requires a robust infrastructure for sales, customer service, and logistics. Indirect channel On the other hand, an indirect channel involves intermediaries whose primary roles include facilitating the movement of goods from the manufacturer to the consumer. Khan, & Ozturk, 2021 in their study on the same implies that the intermediaries in indirect channel can include wholesalers, retailers, distributors, and agents, each playing a specific role in the distribution process. Focusing on my primary product, the 2017 Tesla Model 3, a unique and innovative electric vehicle, its distribution strategy primarily involves a direct channel (Ding, & He, 2022) Tesla, as a manufacturer, sells its vehicles directly to consumers through company-owned stores and

3 its official website. Furthermore, this approach aligns with the aforementioned giant company’s overarching philosophy that relates to maintaining control over the entire customer experience, from product customization to delivery (Khan, & Ozturk, 2021), Tesla's direct distribution model provides a range of advantages. Firstly, it enables the company to communicate its brand message and product features directly to consumers, fostering a strong brand-consumer relationship. Direct distribution further allows this organization to adapt swiftly to market demands and integrate customer feedback into its products and services. However, it is worth noting that Tesla's direct channel is not entirely devoid of indirect elements. In some regions, the firm operates experience centres or galleries where potential customers can explore the vehicles, similar to a showroom experience (Khan, & Ozturk, 2021), While these locations may not involve immediate sales transactions, they serve as a form of indirect marketing and brand exposure. In addition to these direct and semi-direct strategies, it has explored partnerships with third-party entities, such as Home Depot in the past, to showcase its solar products and electric vehicles (Khan, & Ozturk, 2021). While these partnerships might not directly result in sales, they contribute to the overall brand presence and awareness within the market. Conclusion In summary, Tesla's distribution strategy for the Model 3 predominantly follows a direct channel approach. Tesla Inc. maintains control over its brand image and customer interactions through selling directly to n its consumers, However, the incorporation of experience centres and past partnerships implies the nuanced nature of distribution strategies, even within a primarily direct model. The firm’s approach further embraces the importance of adaptability in the dynamic landscape of product distribution.

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4 References Ding, J., & He, Y. (2022, April). Tesla Pricing Strategy Analysis: Take Model 3 as an Example. In 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022) (pp. 1010-1014). Atlantis Press. Khan, H. (2020). Is marketing agility important for emerging market firms in advanced markets?. International Business Review, 29(5), 101733. Khan, M., & Ozturk, I. (2021). Examining the direct and indirect effects of financial development on CO2 emissions for 88 developing countries. Journal of environmental management, 293, 112812.

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Direct and Indirect Channel Strategies

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