Brand
Term of the week
What: A company’s brand is an intangible asset. It represents a moat only if it creates sustainable pricing power and ensures repeat purchases by customers. Mere name recognition does not suffice.
Why: Brand moats enhance businesses’ profitability and longevity by reducing customer acquisition costs and boosting customers’ lifetime value.
How: Brands can be represented by a name (Walmart), slogan (“The power of Intel inside”), logo (Nike swoosh), symbol (McDonald’s golden arches) or design (Tesla).
Conclusion: Brand moats are challenging to build and require ongoing investment to sustain. Mismanaged brands suffer dramatic value losses (Nokia, Kodak) or vanish completely (Palm, Blockbuster).