Name:ZhangZhongShi

Student Number:200286026

Market Research
Proposal for
Tesla
Executive Summary

Tesla Inc. (Tesla) has 20 years of history in Electrical Vehicles (EV) industry. Tesla is

one of the world's most valuable automakers in 2022. However, competitors such as Ford,

Rivian and Mercedes-Benz raises rapidly today. This intense competition forces Tesla to take

a number of approaches to gain customer acquisition and retention.

The objective of this proposal aims to understand customers’ interests and concerns.

We also want to understand the respondents' attitudes toward EV and brand perceptions. One

of the hypothetical results is that we found there is association between gender and level of

satisfaction for driving range limit. This proposal also examines the characteristics of

customers who are likely to buy Tesla. Furthermore, it shows price is the most important

attribute to customers as it contributes the highest utility. We have also used online surveys

and focus groups, which could help to understand customers and raise awareness for Tesla.

There are also plenty of incentives and car models distributed to the respondents and induce

them to retail shop which raise offline visits and retail conversion rates.

We have various statistical and research techniques to tackle objectives. Firstly, we

would make a problem definition to define symptoms and market decision problems. Then,

define our Research Aims (RA) and construct Research Questions based on RA. It helps to

have depth in our understanding to further discover and analyse various variables and

hypotheses which address the research aims. Next, we develop various methodologies and

designs we will tackle our research objectives shown in 2.5 Data Analysis. We have also

considered how statistical techniques are applied to our goals and proved our hypothesis..

Finally, we will specify the timeline and budget required for this whole project.

The hypothetical results could be used to solve the main issue. For example, we

studied consumers’ attached to salient attributes and found that price is the most important

attribute (highest utility). If we cut down the sales price, we could discover there should be a

significant increase in the sales for Tesla products. It is beneficial to the main issue as Tesla is

eager to gain customer acquisition and retention.

 Table of Contents
1. Introduction .................................................................................................................................. 4
1.1 Background information ..................................................................................................... 4
1.2 Current issues...................................................................................................................... 4
1.3 Research Aims ..................................................................................................................... 5
1.4 Research Questions ............................................................................................................. 5
1.5 Research Objectives ............................................................................................................ 6
2. Methodology ................................................................................................................................. 7
2.1 Research Design and Approach........................................................................................... 7
2.2 Purpose of the Research ..................................................................................................... 8
2.3 Timeline............................................................................................................................... 8
2.4 Types of data ....................................................................................................................... 8
2.5 Data Analysis ....................................................................................................................... 9
3. Data Collection ............................................................................................................................ 10
3.1 Primary data ...................................................................................................................... 10
3.2 Secondary data.................................................................................................................. 11
3.3 Sampling design ................................................................................................................ 11
4. Data Analysis and findings........................................................................................................... 13
5. Timeline....................................................................................................................................... 29
6. Budget ......................................................................................................................................... 30
7. Recommendation ........................................................................................................................ 30
8. Appendix ..................................................................................................................................... 30
9. Reference for the study ............................................................................................................... 31
10. Questionnaire............................................................................................................................ 31
1. Introduction

1.1 Background information

Tesla is a multinational automotive and clean-energy company headquartered in Texas.

Tesla designs and manufactures electric vehicles and it is known for its innovative electric

vehicles, including the Model 3 and Model Y.

1.2 Current issues

By 2022, the US market will have a 7.8% penetration of new energy vehicles,

compared to 11.93% globally. This shows that there is still a huge potential market for Tesla

to explore in US and globally. However, competitors such as Ford and Rivian also accelerate

their transition.

On December 8, 2022, Tesla's global order backlog in units was only 163,000 units

left, down nearly 2/3 from 476,000 units in July. This shows that there is significant decrease

in global order backlog and if there is no effective marketing strategies, there should have

continuous decreasing in order backlog units and Tesla would lose competitiveness and

profitability.
1.3 Research Aims

RA1:We want to understand drivers’ attitudes about the electric cars.

RA2:We want to study the brand perception from the customers.

RA3:We wants to understand the current consumer appetites for our products.

1.4 Research Questions

RQ1.1:What is the relationship of the attitudes on Tesla vary across different variables?

RQ1.2:Does each age group differs in the ease of accessing the charging point?

RQ1.3:Is there association between genders and level of satisfaction for driving range?

RQ2.1:What impression Tesla bring to the customers?

RQ2.2:Does the perception of brands differs by age-group and gender?

RQ3.1:What product attributes are important or unimportant to the consumer?

RQ3.2:What characteristics of customers is likely to purchase Tesla?

1.5 Research Objectives

RO1.1:Examine relationship between attitudes and maximum willingness to pay, perceived

driving range limit and convenient access to charging point.

RO1.2:Find out if different age groups have equal means on rating for the convenience access

to charging point.

RO1.3:Examine if there is association between the level of satisfaction and genders.

RO2.1:Examine the impression from customers using focus group for Tesla.

RO2.2:Find out if the perceptions of brand are different between age-group and gender.

RO3.1:Examine if the following factors (price, estimated range, protection services, full
self-driving) can be used to influence new or existing customers to choose Tesla.
RO3.2:Examine the key characteristics of customers that have interests of purchasing Tesla.
2. Methodology

2.1 Research Design and Approach

For this market research, the research was designed to incorporate descriptive

research design as it describes group characteristics and makes specific predictions. The

descriptive approach allows us to refresh our understanding of our target market. We will also

conduct both focus-group and online surveys to gather both qualitative and quantitative

inputs respectively. To resolve potential research design errors that may arise, we have several

moderators for our focus-group study to reduce any potential interviewer/participant errors.

Online survey is more convenient and cost-efficient for respondents. Utilizing large

budget from Tesla, we could give incentives to attract motorists and increase response rate.

Participants are invited through email and are given a week to respond. Upon confirmation,

participants will receive information for discussion, timetable to allocate their timeslots, room

ID and password for the respective zoom meeting.

We decide to cap 100 focus group with 1 hour per session limited to 5 participants per

group. However, we will send links to 8 participants to prevent no-shows. Online focus group

allows for participation across the world to have discussion. This is less time-consuming

compared to face-to-face interview and it offers a more convenient style for our moderator to

induce more probing questions compared to phone interview. Participants are more willing to

engage in online focus group as they are allowed to join the discussion at their own

convenience. More prizes will be issued after participating in the focus group.
2.2 Purpose of the Research

Tesla is eager to accrue market share and increase sales of their products. Tesla is

concerned with both customer acquisition and customer retention. The purpose of this

proposal is to understand customers’ attitude and perception of EV industry.

2.3 Timeline

We propose conducting cross-sectional design. Cross-sectional studies measure units

from a sample of the population at only one point in time. This allows us to collect

information on Tesla on our target market in real-time is what we are interested whereas a

longitudinal design which requires a longer time frame to repeatedly measures the same

sample units of a population over time coupled with the use of panel.

2.4 Types of data

For the market research, the primary data that will be used are the data collected via

the online surveys and focus-group studies. We will also be referencing secondary data

sources to get a more accurate representation of the variables.

2.5 Data Analysis

For the data analysis, we will use statistical techniques SPSS to analysis the data

collected. Below are the statistical techniques that we propose for each research objectives,

R.O.1.1 – Multiple Linear Regression (MLR)

R.O.1.2 – 1-Way ANOVA, Levene’s test

R.O.1.3 – Contingency Table,  test of independence

2

R.O.2.1 – Focus group, mood broad

R.O.2.2 – 2-way ANOVA

R.O.3.1 – Conjoint Analysis

R.O.3.2 – 2-group discriminant analysis

3. Data Collection

3.1 Primary data

Approach Methods of Data
Information Sources of Data
(Qualitative|Quantitativ Collection Sampling Technique
Required (Primary|Secondary)
e Research) (Survey|Focus Group)
Annual Household
Quantitative Primary survey
spending
maximum
willingness of pay in Quantitative Primary survey
US dollars
perceived driving
range limit on a
Quantitative Primary survey
single battery charge
in miles
Gender
(demographic Qualitative Primary survey
information)
Age (demographic
Quantitative Primary survey
information)
Judgmental sampling
Residence
(demographic Qualitative Primary survey
information)
Convenience access Survey (using Likert
Quantitative Primary
to the charging point scale)
Driving times per
Quantitative Primary survey
week
Carsickness Qualitative Primary survey
Satisfaction level for
Qualitative Primary Survey
driving range
Strength and
Qualitative Primary focus group
weakness of Tesla
Brand impression for
Qualitative Primary focus group
Tesla
3.2 Secondary data

Information Approach Source of Data Methods of Data

required Collection
Age group Qualitative Secondary Survey (need data
wrangling and categorize)
Current Quantitative Secondary Database
driving range
Annual Sales Quantitative Secondary Database

3.3 Sampling design

For market research, we propose to use non-probability sampling techniques:

judgmental sampling, probability sampling techniques are rejected as each unit in a

population has a specifiable chance of being selected. However, judgmental sampling is in

which appropriate characteristics are required of the sample, the population elements are

selected based on the judgment of the researcher.

We will distinguish characteristics that suit for our research by asking people and

identifying who match the target profile through a series of questions. Our intended target

population is the following:

Age Under legal driving age (18+)

Communication Able to understand questions and hare their thoughts and opinions

Residence North America,Europe,East Asia,South-East Asia,Middle East

Table: requirements of respondents

After that, we will consider which groups are convenient and typical for the research,
assemble each of these different groups into a focus group to discuss our question. We will

create the online meeting at a convenient time and inform after they choose their available

time. With each group, one or two elements are selected based on typicality and convenience.

3.3.1 Respondents size

To calculate the number of respondents for the survey needed, we will use the sample

size determination method. The average response rate for questionnaire estimated 30% with

incentives offered, we have a population size of at least 5000. Therefore, at 95% confidence

level, 100 standard deviation for the driving range on a single battery charge, and a margin of

error (confidence interval) of +/- 5%.

Average response rate formula:

z  
2

n    /2 
 e 

Calculation

(1.96)2 (100)2
N  384.16  385 (nearest integer)
102

After taking in consideration of the average response rate:

3
385   1283.33  1284 (nearest integer)
10

After determining sample size, we could use this sample size to discover perceive

driving limit on a single battery charge in the following section.

4. Data Analysis and findings

4.1 Research objective 1.1

In Multiple Linear Regression, we use additional independent variables that help us

better predict the dependent variable. It examines the relationship between attitudes on our

products and the following variables:

· maximum willingness to pay (in US$)

· perceived driving range limits on a single battery charge (in miles)

· convenient access to charging point (measured on 7-point Likert scale)

These variables are to test if the factors we identified has individual or joint impact on

the change in attitudes of consumers towards Tesla.

There is no relationship between attitudes and the following variables:

H0
• maximum willingness to pay
• perceived driving range limits on a single battery charge
• convenient access to charging point
There is relationship between attitudes and the following variables:
H1
• maximum willingness to pay
• perceived driving range limits on a single battery charge
• convenient access to charging point
Y Attitudes
X X1 : maximum willingness to pay
X2 : perceived driving range limits on a single battery charge
X3
: convenient access to charging point

The following formula will represent the estimated multiple linear regression used on

historical observations:

Y  0  1 X1  2 X 2  3 X 3
 0 : The intercept (the value of Y when all X is equal to 0)

 J : The amount by which Y changes when X j increase by 1 unit, with the values of all other

independent variables held constant, j = 1,2,3,4,5,....

Using SPSS, we would use partial t-test and F-test to test for individual significance

of the variable and overall significance of the model respectively. This allows us to identify if

variables identified influence consumer’s attitudes. Finally, we would use adjusted  2 to

determine the significance of each variable.


4.2 Research objective 1.2 (1-WAY ANOVA)

One-way Analysis of variance (ANOVA) would be used for RO1.2, this could

examine the differences between groups of responses which are measured on interval or ratio

scales. 1-way ANOVA could be used to discover the relationship between age group and

convenient access to charging point (7-point Likert scale). From each age group, we would

test if all the rating point (means) for the accessibility are the same in these 3 groups.

Descriptive

Age Group N Mean Std. Std. Lower Bound Upper Bound (95% Minimu Maxim

deviation Error (95% CI for mean) CI for mean) m um

18~35

36~49

50 and above

Total

Observations for descriptive

18~35 36~49 50 and above

Sample size

Mean rating point

Standard deviation
ANOVA table

Let 1 be the population mean rating point for the 18~35 age group

Let 2 be the population mean rating point for the 36~49 age group

Let  3 be the population mean rating point for the 50 and above age group

H0  A  B  C (all means are equal)

H1 Not all means are equal

Let  = 0.05, reject H 0 if p-value<0.05. Conclude that at 5% significant level, not all

means are equal.

Moreover, we could conduct Levene’s test to test for homogeneity of variances in

each dependent variable.

Levene’s Test

12 Variance of rating point from group of 18~35

 22 Variance of rating point from group of 36~49

 32 Variance of rating point from group of 50 and older

H0
12 =  22 =  32

H1 Not all variance are equal

Reject H 0 if p-value<0.05. If P-value>0.05, do not reject H 0 and conclude that at 5%

significant level, the variance of rating point is not significantly different between groups. At

same time, if the variance is inconsistent, it is not meaningful to compare all means  (A,B,C)
4.3 Research objective 1.3

Chi-square (  ) test of independence could be used to solve this RO. We could

2

examine if there is association between gender(nominal) and the level of satisfaction

(ordinal) of current driving range limit(database, eg: average 350miles) on a single battery

charge. Gender and level of satisfaction would be investigated in online survey.

Firstly, we create a table with the observed, expected frequencies and (O  E )2 / E . As

we measured in 3.3.1, we have determined minimum sample size which is 1284. Therefore,

we should have in each column as expected value.

1
Ei  n  , i  1,2,..., k
k

where n denotes the sample size and 1/k is the uniform probability for each characteristic,

assuming k classifications.

1
E i  1284   214
6

We have 6 classifications and with the sample size 1284, we could get the expected

frequencies 214. After getting observed frequencies, we calculate (O  E ) / E in each

2

column and add up all values of the (O  E ) / E column to get the chi-square test statistic
2

(  ). This could measure whether the observation is significant difference from expectations.
2
 Gender Level of satisfaction

Low Medium High Total

Male O

(O  E )2 / E

Female O

(O  E )2 / E

Total

However, the value of the  statistic does not indicate the strength of the association.
2

To describe the relationship between two variables, we could determine the measures of

association using Cramer’s V(V=0~1), a larger V indicates a high degree of association.

Formula:

While we could also use Lambda to measure the improvement in prediction of

dependent variable, level of satisfaction. The range for Lambda is from 0 to 1 as well.
4.4 Research objective 2.1

Online focus group is conducted to understand impression Tesla brings to motorists.

As it makes more potential and wide-ranging participants easy to discuss and get together as it

could reduce difficulties for them. This shows the difference from the traditional focus group.

Online could avoid conflicts in face-to-face focus groups. Participants can be made to feel

that they have the ability to contribute, allowing their confidence to be quickly built up.

We would recruit trained moderators to reduce interviewer error and participant

errors(step6). Examples like inaccurate, socially acceptable or fabricated answers would

reduce. Each participant will be given time to answer each section of the questions being

probed. Participants’ expressions and behaviors will be monitored and moderator is present to

ensure a respectful discussion among participants. Discussion will be recorded and available

after the sessions to provide information for analysis (step9). The moderator will start the

discussion with a mood board (table1). A mood board is frequently used to evoke or project a
particular style or concept to the participants. Focus group participants could snip words and

pictures which they see as representing the values a particular brand is perceived to have.

Then, moderator could further ask ‘Could you talk more about it?’.

Table 1: Example of mood board

Ultimately, the goal of online focus groups is to have further probing into impressions

that customers have. Hypothetical assumptions for the impression of Tesla could be:

1. Accidents easily occur

2. Design look is innovative

3. Driving range is not desirable

4. Innovative software experience

5. Good service and After-sale

6. High brand Popularity

4.5 Research objective 2.2

2-Way ANOVA would be used for RO2.2. The independent variables are Age-group

and Gender while the dependent variable is the respondent’s perception of brand

Gender Age-group

·male ·18 to 35 GROUP

·female ·36 to 49 GROUP

·50+ GROUP

Firstly, we should conduct the analysis separately, this means we should give 2 null

and alternative hypothesis:

H0 There is no difference between genders and respondent’s perception of brand

H1 Not all means are equal

H0 There is no difference between age-group and respondent’s perception of brand

H1 Not all means are equal

The Partial  2 would measure and tell us the variability of the dependent variable

(Change in Perception Level) accounted for by the independent variable (age-group or

gender). The value of the Partial  2 meant that for the factor accounts for 100X% of the total

variation. For example, for gender Partial  2  0.018 means that gender accounts for 1.8% of

the total variation in the perception of brands not attributable to other variable.
 H0 There is no iteration between gender and age-group

H1 There is iteration between gender and age-group

We will also test for the interaction effect to check if the effect of independent

variables is different for different categories on the dependent variables. If p-value < 0.05, we

could reject H 0 and conclude that at 5% level, there is iteration between gender and

age-groups.

By using SPSS, we generate the Test of Between-Subject effect table and from the

table we can identify if the population mean of gender and age-group differs with each other

significantly. If the null hypothesis is rejected, we can conclude that the perception of brands

differs by age-group and gender.

4.6 Research objective 3.1

We will be using Conjoint analysis to achieve RO3.1. Conjoint analysis allows us to

understand how customers make decisions and prioritize attributes of a product or service. We

decide to use price, estimated range, protection services, full self-driving as attributes to

understand consumers preferences for a product.

Define the research problem
Identify the attributes
Collect and analyze the data
Interpret the results
The assumption or findings
in market report
What product attributes are important or unimportant to consumers?
Price, Estimated range, Protection services, Full self-driving
Analyze using SPSS
Results would be interpreted below
We make assumption that in order of relative importance, price is most
important attribute following by estimated range, protection service and full
self-driving

We determine the level of importance that our customers attached to each of the

listed factors which could be used to influence their choices in choosing Tesla as their next

option. Below are the factors & their categories.

 Price Estimated range Protection services Full self-driving
1. To check if 1. To find out what 1. To find out if 1. To find out if FSD

$45000 consumers want to 250 driving range is Yes protection Yes is the most

pay for higher miles the most services most on significant factor

2. premium or lower 2. 350 acceptable 2. consumer choice 2. on consumer choice

$55000 price miles No No

3. 3. 450

$65000 miles

Factors and categories

We propose making use of orthogonal array of L9 configuration to reduce the

number of possible combinations. This allows us to estimate the effects of each variable with

negligible interaction effects and identify possible relationships that may unknowingly attract

consumers.

Experimental Price Estimated Protection Full

Number range services self-driving
Ex.1 1 3 1 2

Ex.2 1 2 2 1

Ex.3 1 1 1 2

Ex.4 2 3 2 1

Ex.5 2 2 1 2

Ex.6 2 1 2 1

Ex.7 3 3 1 2

Ex.8 3 2 2 1

Ex.9 3 1 1 2

Taguchi Design Sample-L9 Table

By using SPSS, we would generate the utility score and standard deviation of each of

the variables and its categories. The higher the utility value signifies the greater the preference

for that variable. The utility score of each variable and its categories can be summed up to get
the overall utility, hence creating a utility score of any combination of variables(categories) or

finding out the most preferred variable.

Attribute Level Utility Estimate Std. Error

price $45000

$55000

$65000

Estimated range 250 miles

350 miles

450 miles

Protection services Yes

No

Full self-driving Yes

No

constant

We will use Pearson’s R as a measure of goodness of fit to measure the predictive

ability where high values of statistics and below 0.05 significance level would determine that

the design has good predictive ability.

4.7 Research objective 3.2

2-Group Discriminant Analysis will be conducted. We examine the key

characteristics in customers that have interests of purchasing EV cars. Let the predictor

variables be the Annual household spending, Driving times per week, Carsickness and

Age, the dependent variable is whether the customers will consider Tesla or NOT.

H0 There are no distinct factors that affect customer’s decision to consider

Tesla.

H1 There are distinct factors that affect customer’s decision to consider

Tesla.

X X1 = Annual household spending

X2 = Driving Times per week
X3 = Carsickness
X4 = Age
D Classification of customers decision
D = 1 (Will consider Tesla)
D = 0 (Will not consider Tesla)

D  0  1 X1  2 X 2  3 X 3  4 X 4

D = Discriminant score

 n = Discriminant coefficient for variable n

 Group statistics show the descriptive statistics in terms of mean and standard

deviation of each predictor variable. After deriving Group Statistics table, we estimate the

coefficients, determine the significance of the function/predictors using:

To assess the contribution of predictors:

1. In below Test Equality of Group Means table, a smaller value for Wilk’s Lambda

or larger F value indicates a better discriminatory potential of each predictor in the

discriminant model. If P-value <0.05, the predictor variables are statistically significant.

Wilk’s Lambda F df1 df2 Sig.

Annual household spending

Driving times per week

Carsickness

Age

2. Structure Matrix table, canonical correlation provides the correlation between

each predictor and the discriminant function, this means we could get constant and  for the

following formula:
 D  0  1 X1  2 X 2  3 X 3  4 X 4

Eigenvalue measures how well the discriminant function discriminates between the

categories. The larger the eigenvalue, the better the discrimination. Canonical Correlations

measures the association between the groups of the dependent variable and discriminant

function. A large canonical correlation indicates the discriminant function has a high

discriminating power between two groups.

Function Eigenvalue % of Variance Cumulative % Canonical Correlation

Wilk’s Lambda is a measure of how well each function separates cases into groups.

The scale ranges from 0 to 1, 0 means total discrimination and 1 means no discrimination.

Smaller values of Wilk’s lambda indicate greater discriminatory ability of the function. If p <

0.05, reject H 0 and conclude the discriminant function is highly effective in discriminating

between two groups.

Test of Function Wilk’s Lambda Chi-square df Sig.

The Classification Results table summarises the success of the identified

discrimination function. From Classification Result, calculate the hit ratio based on the

validation sample. Given, by chance alone, 2 groups would expect a hit ratio of 50%, we

calculate the improvement over chance.

 The results could provide insights on whether factors such as Annual household

spending, Driving times per week, Carsickness and Age would attract customers will

consider Tesla or not.

5. Timeline

information start end days

Project Approval 1-Mar 3-Mar 3
HR recruitment 4-Mar 13-Mar 10
Distribute online survey to respondents through Email 11-Mar 17-Mar 7
contact focus group participants 11-Mar 25-Mar 15
Data collection for online survey 18-Mar 17-May 61
Data collection for focus group participants 25-Mar 16-Jun 84
Data Prepartion 14-May 1-Jun 19
Data Analysis/Wrangling 10-May 30-Jun 52
Prepartion of final research report 1-Jul 1-Aug 32
Results and Recommendation of findings 2-Aug 10-Aug 9
6. Budget
Description Cost(estimated) Reasoning
$8 per survey (5000 samples expected), $50 for beverage and
Online survey $152500
toys with collect rate 45%, total is estimated with $152500
$100 per focus group, with 100 focus group, total incentive is
Focus-group incentives $100000
$100000
Human resource $80000
Data gathering and preparation $50000
Data Analysis $100000
Miscellaneous expenses $70000
21% GST tax $126000 US tax.
Total US$678500

7. Recommendation

·Lower sales price for customer

As in RO3.1, we found that price is the most dominant factor that influences

customers’ decisions and with the adjustment to the price, there could have higher sales

expected which lead to higher total profits.

The strategy of cutting prices for customers could also be large amount of coupons,

which indeed leads to lower prices as well. However, this could make customers feel that

there should have coupons in the future as well. So they would not purchase but wait.

Therefore, straightly decreasing the sale price is the best strategy.

8. Appendix
Special thanks to Mr Dion Chan for their insight for this research proposal. With

constant communication and recommendation, this research proposal has been successfully

made.
9. Reference for the study

Abdey, J., 2021. ST3188 Statistical Methods for Market Research. [online] University

of London. Available at: <https://emfss.elearning.london.ac.uk/>

https://peoplepulse.com/resources/useful-articles/survey-response-rates/

https://www.analysisinn.com/post/kmo-and-bartlett-s-test-of-sphericity/

https://www.statisticssolutions.com/free-resources/directory-of-statistical-analyses/fac

tor-analysis/

https://www.investopedia.com/terms/stratified_random_sampling.asp

10. Questionnaire

Tesla model toys sample:

11. Word count

Excluding executive summary, table of contents, labels, words in tables, equations,

footnotes, labels, numbers, legend and questionnaire, the word count is 2984.

-End of Survey-