Tesla As A Cascade
Tesla Motors needs no introduction. The Tesla Model S, Tesla’s only current offering, is highly regarded amongst critics and consumers. However, the automaker has suffered a sizeable setback recently at the hands of Consumer Reports, a website where consumers can find a variety of information about various companies and products, such as safety ratings. Indeed, Consumers Reports recently pulled its recommendation of the Model S, citing poor reliability ratings of Teslas that have been on the road for awhile. This news comes as a surprise given that the Model S has dominated many automotive rankings, including reliability, in the past.
Tesla is an excellent example of a cascade, where a small set of initial adopters set an initial precedent that eventually led to explosive popularity. While the Model S’s selling price is fairly high at $100,000+, certainly above the average consumer’s pay grade, Tesla was able to gain a foothold in a high barrier to entry industry by utilizing the concept of a tipping point. In other words, Tesla aligned its business strategy such that they won over the attention and wallets of consumers who may have grown weary of the “old boys” in the luxury auto market such as BMW and Mercedes-Benz. To accomplish this, Tesla chose an elegant marketing campaign that highlighted the Model S’s high build quality, unmatched safety innovations, sustainability, and high-tech, cutting edge appeal. The company also improved the car buying experience in choosing to sell cars directly to the consumer as opposed to relying on a middleman that most consumers do not enjoy dealing with – car dealerships.
Tesla’s marketing proved effective, and the Model S was being shipped to garages of enthusiastic early adopters who would serve as informal brand ambassadors. These early Model S owners created Tesla forums and raved about their cars online, and critics agreed that the Tesla created an outstanding car. This set of early adopters later reached a tipping point, where the Model S cemented a foothold in the market and rapidly gained in popularity. This leads to another aspect of Tesla’s appeal – namely that the more people driving Teslas, the better for all Tesla owners. Many Model S owners have written apps, guides, and other resources for the Model S that positively impact other Tesla owners’ experiences and satisfaction with their cars. This is related to the concept of collective action, where a product/event becomes more valuable as more people use/attend it.
Thus, we can view Tesla’s rise as a cascade, diffusing through the network of luxury auto owners. Will Consumer Reports pulling Tesla from its recommended list stop the cascade? We know that dense clusters are the only way to stop a cascade, and therefore it is unlikely to completely stop Tesla’s diffusion. With the Model X SUV’s debut on the horizon, Tesla’s future looks evermore promising.
Source: http://www.nytimes.com/2015/10/21/business/consumer-reports-stops-recommending-the-tesla.html?_r=0