I think Scott Alexander’s Why Real Men Wear Pink provides a useful lens here. Indeed, in the case of Tesla, you are correct that Tesla sends a signal by not advertising—they know they can sell cars without doing any advertising, because they know you know that their product is just that good—and when you see they don’t advertise, you know that they know that you know their product is just that good.
But consider the case of just about any other mainstream car company today (well, aside from Ferrari and Porsche, maybe a few others)- their product may be great, or it might be below par, but either way, they can’t be sure that you know that. The below par company might be able to sell a few cars through advertising, but buying a new car is a big enough deal for most consumers, that they will do their research before buying the car, and will know to avoid the subpar brand, so even with a lot of advertising, they won’t earn back what they spend. On the other hand the company with a very solid product, but who doesn’t have Tesla’s reputation, will find that their profits will be very closely proportional to how much they advertise, and so will advertise as much as they can.
In short:
S-tier: Tesla: No advertising
A-tier: Solid car company: A lot of advertising
C-tier: Subpar car company: Minimal advertising
Neither the S-tier nor the C-tier does heavy advertising, but the important thing is, you already know who’s S-tier and who isn’t. When a company isn’t S-tier, a lack of advertising can be interpretted as a lack of confidence in the product
I’m not sure what “as much as they can” means. A company can choose to spend more or less on advertising. They can spend less on product quality and take that money to spent on advertising
Cars are not either solid or subpar but they provide value for a given price.
Company A might say: Our strategy is to run a lot of advertising and then charge a lot of money for our cars to make a huge profit.
Company B might say: Our strategy is to provide customers with a cheap car and that means we won’t have a budget for a lot of advertising.
In many cases it can make sense to buy from company B and get a car that’s better value for money. Cars are however a special case. Value conscious car buyers don’t buy new cars but used cars
The fact that Coca Cola spends so much money on advertising doesn’t indicate that their product is better then any other. It just reflect that they believe that they have a brand that allows them to charge a surplus.
I think Scott Alexander’s Why Real Men Wear Pink provides a useful lens here. Indeed, in the case of Tesla, you are correct that Tesla sends a signal by not advertising—they know they can sell cars without doing any advertising, because they know you know that their product is just that good—and when you see they don’t advertise, you know that they know that you know their product is just that good.
But consider the case of just about any other mainstream car company today (well, aside from Ferrari and Porsche, maybe a few others)- their product may be great, or it might be below par, but either way, they can’t be sure that you know that. The below par company might be able to sell a few cars through advertising, but buying a new car is a big enough deal for most consumers, that they will do their research before buying the car, and will know to avoid the subpar brand, so even with a lot of advertising, they won’t earn back what they spend. On the other hand the company with a very solid product, but who doesn’t have Tesla’s reputation, will find that their profits will be very closely proportional to how much they advertise, and so will advertise as much as they can.
In short: S-tier: Tesla: No advertising
A-tier: Solid car company: A lot of advertising
C-tier: Subpar car company: Minimal advertising
Neither the S-tier nor the C-tier does heavy advertising, but the important thing is, you already know who’s S-tier and who isn’t. When a company isn’t S-tier, a lack of advertising can be interpretted as a lack of confidence in the product
I’m not sure what “as much as they can” means. A company can choose to spend more or less on advertising. They can spend less on product quality and take that money to spent on advertising
Cars are not either solid or subpar but they provide value for a given price.
Company A might say: Our strategy is to run a lot of advertising and then charge a lot of money for our cars to make a huge profit.
Company B might say: Our strategy is to provide customers with a cheap car and that means we won’t have a budget for a lot of advertising.
In many cases it can make sense to buy from company B and get a car that’s better value for money. Cars are however a special case. Value conscious car buyers don’t buy new cars but used cars
The fact that Coca Cola spends so much money on advertising doesn’t indicate that their product is better then any other. It just reflect that they believe that they have a brand that allows them to charge a surplus.