Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup of interesting reads in another edition of Happy Hour.
Brand Power
BrandZ released it’s top 100 brands of 2014 this week. With it, Apple was unseated by Google as the top brand this year.
Whether you’re aware of it or not, powerful branding breeds loyalty. With many of these brands, there’s a small fanatical base, like the Apple fanboys, that become walking billboards for the products.
Not only do we pay up for these products, but we repeat the process as if we’re conditioned to only buy that brand. It’s why you buy the same toothpaste or laundry detergent over and over. Why don’t you switch?
Buffett recognized this early on, tossing brand power into his list of competitive advantages that add pricing power.
The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business. – Warren Buffett
His Coca-Cola investment and Heinz buyout back this up, along with his recent purchase of IBM shares. Each of the top 10 brands in the list share that ability to raise prices to some degree without degrading their customer base, and at the very least to cover inflation:
- Apple
- IBM
- Microsoft
- McDonald’s
- Coca-Cola
- Visa
- AT&T
- Marlboro
- Amazon
Those 10 companies represent seven industries – four in tech, and the rest represent food, beverages, credit cards, telecoms, tobacco, and retail. It’s a who’s who of best of breed industry leaders.
Maybe a brand power ETF should be built based on the top 100 companies.
Last Call
- Lower Your Fees, Boost Your Returns – Morningstar
- Investors Must Recognize What ‘This Time It’s Different’ Really Means – Washington Post
- Everyone Has their Own Version of History – M. Housel
- What Kills You and Your Investments – Bloomberg
- Simple Lessons To Save Your Bonds – Servo
