Lean Brands by Luis Pedroza

Author:Luis Pedroza
Language: eng
Format: epub
ISBN: 9781632657671
Publisher: Red Wheel Weiser

Figure 6.38. WeChat Starbucks campaign in China. Photo credit: Amy Hsu

According to Belinda Wong, CEO of Starbucks China, “WeChat Pay has already reached a remarkable 29 percent of tender and has elevated the Starbucks Experience for both customers and partners through its convenience and fast transaction speed. We saw growth in all categories and day-parts” (see Figure 6.38 on page 160).77

Tesla

In 2016, Tesla's China sales tripled from the previous year, which helped the company earn $1.1 billion in revenue from the China market alone.78 Tesla is managing to grow sales despite being more expensive than local electric vehicles and higher than Tesla cars sold in the United States. Because Tesla cars are manufactured in the United States, they are subject to additional costs that do not apply to locally made vehicles, such as a 10 percent sales tax, 25 percent tariff, and the extra cost of shipping a Tesla all the way from California to China.79

In response, Tesla is encouraging Chinese consumers to consider the total cost of buying and owning one of its electric vehicles. By doing this, the brand can reframe the price conversation.

Local Chinese dealerships typically inflate the list price of imported cars like BMW, Audi, and Mercedes-Benz by tens of thousands of dollars, adding various fees on top of the advertised price. Tesla's innovative direct sales showrooms do not add fees, thereby reducing the stress involved in making a new car purchase. The company also emphasizes the savings a consumer can expect to enjoy as an owner of a Tesla compared to a gasoline-fueled car during the life of the vehicle, including the benefits of having access to Tesla's easy maintenance and charging services.

Nevertheless, what's proving to be one of the most impactful factors in increasing perceived value is the differentiated image of Tesla. Like Apple stores, Tesla showrooms are modern and fun to visit compared to traditional luxury car showrooms (see Figure 6.39). Tesla has even built eighteen “experience centers” in China where schoolchildren can come on field trips to learn about science, electric vehicles, and green energy.80 The brand has been rigorously promoting its “green” positioning in China. As a result, the Tesla brand is now associated with being young, technologically savvy, and on-trend in China.

By occupying a foreign/aspirational space in the minds of consumers, Tesla has made its price point less relevant. In many ways, Tesla now finds itself competing against luxury gas-powered vehicles in China, instead of locally madeelectric-powered cars.81

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