Ch. 6 - Consumer Decision Making

Need Recognition
"I need to get from A to B. I should buy a car"

Information Search
Let's face it, very few people decide to buy a car because they happened to see one in the window on their way to Starbucks, and they just had to have it. For the most part, the vast majority of car shoppers engage in more research and effort than they did on their college final papers. This is most likely because they usually end up paying more than they have in their bank account at any given time to have the car they want, and will spend the next few years paying it off.

With the exception of well-to-do idealists who would buy a Tesla because they can afford to make the statement they believe in without compromising luxury, and people rich enough to get anything for the iconic trendy value, for most people the immediate benefits of electric cars are not yet significant enough to strongly tip the scale in their direction. For the majority of people, in fact, the consideration of overall cost and convenience consideration takes place well before the fuel consideration- when you start up looking for a car, the first question usually is "how much can I pay?", followed (by reasonable consumers) with "what is practical?", and then somewhere down the line, providing the first two don't eliminate the option- "gas or electric?"

Evaluation of Alternatives
Tesla is not in the competitive market of Electric Vehicles. That highly specific market is still too insignificant to be considered competitive on an international scale. Tesla is in the competitive market of Vehicles. Period. And until people start caring about the source of a cars power more than the price or comfort, it will be in the same pool as all the other liquid hyped kids.

So lets talk about price- since that's the first question usually asked. At $69,000 base price, and a wide assortment of impressive technology, Tesla is still very clearly marketed to luxury oriented consumers, which prices it out of reason for the bulk of auto market consumers, much like Lexus. But even with the promise of no gas costs, the initial price and long term maintenance still make it a questionable investment on most people salaries. Now many people who are specifically in the market for luxury cars, who could afford the price tag, would also consider a key topic in that investment- convenience. Why is Telsa better than Lexus?

Now, assuming you are a common luxury car buyer, not necessarily too worried about the environment enough to consider it in balance with your own troubles- why would buying electric make sense compared to the gas fueled competitor? Well, some of the many answers to that are raw responsive power, quiet driving, and not having to worry about rising gas prices. But at this point it's still fair to say that put so simply it is still too good to be true. Well no, you don't have to worry about gas prices- but you do have to consider other factors such as driving range, presence of charging stations (that are still not nearly as ubiquitous as gas stations), charging time- and really many other not yet fully addressed EV issues. With all these things to consider on a daily basis, gas powered vehicles seem easier to deal with since gas stations can be found everywhere, and the average driver doesn't need to be bothered with how far he's driving or plan ahead to know when and where he'll need to refuel.

Purchase
"You had me at 17" touchscreen! I'll take it!"

Post Purchase Behavior
Now what most of us never even consider, is that the majority of cash flow in the auto industry runs in the river called "maintenance and parts". While this is an unavoidable fact, since driving a thousand miles is bound to cause some wear and tear on some thing-a-ma-jigger, it becomes a secondary nuisance if you can't find someone nearby to pop open the hood for you. While many people feel comfortable going to their dealer, many others enjoy shopping for cheaper parts and service at local mechanics. But seeing as only one out of every 100 motors is powered by a battery, and Tesla has less service stations per state than the average person has fingers on a single hand, finding someone to fix it when it starts making that noise you don't like hearing can be an issue.

The bottom line is that there is not yet enough on Tesla scale to tip the balance in their favor on a larger scale at this point in time. The majority of cost conscience and easy minded consumers would still not feel comfortable investing in a Tesla rather than a Lexus (if they could afford it). But as was mentioned in earlier posts- there is a plan to address all such concerns- price, convenience, service- it's all being implemented as I write this, and it is only a matter of time before the pile on the Tesla side of the scale gets larger than the other.