Comments on: Brands versus Franchises

By: Active Value Investing - Fat Pitch Financials

Active Value Investing - Fat Pitch Financials — Sun, 21 Oct 2007 21:07:44 +0000

[...] In Chapter 5 on quality, I was especially excited to see a section on competitive advantage. I found it interesting that Vitaliy focuses on the importance of sustainable competitive advantage similar to the way I do, and uses the same term for it that I use. I know that Buffett uses the term “durable competitive advantage”, and I’ve seen a few other variations elsewhere, but I prefer focusing on “sustainable” competitive advantage. To further illustrate what sustainable competitive advantage is, Vitaliy provides a great discussion on brands using several good examples to make his point. I had a similar discussion on brands back in October of 2005 where I posted about brands versus franchises. [...]

By: Investment Moats » Find Moats when looking at companies

Investment Moats » Find Moats when looking at companies — Tue, 22 Aug 2006 00:07:59 +0000

[...] Brand name franchise – Developing a great brand can be a long and involved process to develop customer trust and mind share. Creating a brand is not enough to gain a wide moat. You need to be able to convert that brand into a franchise that customers connect with at many levels. A brand that can be converted into a franchise can then be expanded into other related products and services and keep competition from nibbling away at your corners. [...]

By: Ten Ways to Build Moats to Hold Back Competition - Fat Pitch Financials

Ten Ways to Build Moats to Hold Back Competition - Fat Pitch Financials — Thu, 17 Aug 2006 04:23:37 +0000

By: Matthew Turner

Matthew Turner — Thu, 20 Jul 2006 05:46:24 +0000

Love the blog, glad I found you off Phil’s site. I look for three main things in a strong brand: consistent delivery on their brand contract (remember the New Coke fiasco?); sacrifice (Volvo owns ‘safe’ but not ‘speed’ while Subaru owns ‘AWD’); shock and awe (Nordstroms will actually send business to a competitor if that will wow the customer with superior service).

By: Debating Whole Foods’ Moat - Fat Pitch Financials

Debating Whole Foods’ Moat - Fat Pitch Financials — Fri, 13 Jan 2006 05:16:07 +0000

[...] I agree that Whole Foods has a strong brand and is competing on quality versus price. However, as I discussed in an earlier post, brands do not always result in a sustainable franchise. I think the grocery store retail business is a brutally tough business. There is a lot of competition in the grocery sector and slim profit margins. It is very easy for fickle customers to switch to another store at any time, especially if someone offer a better quality/price blend. [...]

By: Nick

Nick — Thu, 03 Nov 2005 07:17:20 +0000

As for number one, there is a small, but growing, demand for “green” energy” branded electricity. Green Mountain Energy of Austin, TX is an energy producer dealing in Wind and other renewables and it’s certainly a “brand” that people choose – at a premium. It’s been very succesfull and is growing rapidly.

Airlines certainly used to be extremely strong brands. These days that’s less so. Among those who travel a lot.. airline brand is still something they identify with, but indeed, the bulk public is seldom aware.

Nice post btw!

By: Dennis Howlett

Dennis Howlett — Tue, 01 Nov 2005 04:50:14 +0000

There’s oneobservation I’d like to make. Professional services that have an element requiring a relationship. Like accountants, dentists and lawyers have special issues.

Here, the relationship is either highly fragile or rock solid and is usually in the fragile zone. There’s little middle ground in many cases. If anything, there is likely to be indifference on the grounds there is little differentiation.

That certainly seems to be the case with most accountants in practice I speak with. And it is very difficult to get them to shift their thinking. But there are significant competitive pressures, especially in the the area of commoditised accounts preparation, audit and tax calculation. So wherer does brand and franchise start and stop for these people?

So the thing here is to create and develop the relationship at an individual level but in such a way that it is associated with the brand.