Wednesday, August 27, 2008

the brand

A brand name according to mr webster is the name which a given brand of goods is known. A brand is an identifying mark;trademark. Or something that distinguishes it from other goods. :) from an accounting point of view this is an intangible asset because it is something that cannot be quatified but i do believe that it is a very powerful weapon that can be used by any company. :) a perfect example of this is my friend's dad, we were discussing about stocks one time and he mentioned that he only buys ayala stocks. The main reason is that you believe in the product or in the company. :) he believes that the company is ethical and always puts shareholder interests first. :) it is the ayala brand for my friend's dad that set it apart from other companies knowing that the company stands for excellence. :) another example here is jollibee and mcdonald's. Why do people prefer the bee over ronald macdonald? :) maybe because people here see that jollibee is more suited for the filipino tongue or is it something that they can identify with? There are so many questions to be asked but one thing i do know is that a strong brand will definitely have an advantage over its competitors. :) a firm believer of this is nobody else but mr warren buffett himself. :) but we do have to admit he was more a student of benjamin graham when it comes to value investing but his path what somewhat influenced by his partner mr charlie munger. :) if it wasnt for charlie munger buffett wouldnt have bought see's candies which was five times its book value, coca cola, american express, just to name a few. :) but munger showed him that even though the company was five times its book value there was still value to be found because the see's candies brand cannot be quantified. :) it doesnt show in the financial statements of the company. :) just doing a little survey among my friends i asked what softdrink would they rather have?? pepsi or coca cola. :) the answers that i got were interesting. :) around 2/3 of the respondents wanted to have a coca cola. :) i got a lot of answers saying that they were already used to drinking coke and that it tastes better. :) i also believe that the advertisements have an influence on the preference of the respondents also(this is just a theory of mine) because the ads condition the viewer subliminally that coke is better. :) and we do have to admit that coke is the stronger brand because just the bottle itself is recognized by millions of people around the world. Another theory of mine is that there is really brand loyalty by consumers. :) the coke distribution network here in the philippines, i believe, is superior compared to its counterparts which makes us come to the conclusion that by the time its competitors are able to penetrate the different parts here in the country most of the time coke was already there first. And when consumers are comfortable or get used to a certain product most of the time they will stick it out with the product. :) that example also applies for smart here in the philippines. :) being the first to really have the widest cellular coverage in the country so it also follows that a lot of people had smart as their first cellular network and a lot of those people have continued to patronize the said network which makes it really hard for other networks to equal their subscriber base. :) and another question i was sharing with my best friend the other day... what if a diffrerent container was used and you put coke inside it and the name on the bottle will be “coco-cola”. Will it sell as good when it was in the distinct coke bottle with the red coca cola logo on it?? :) now you tell me will you yourself buy the product? :) thank you so much for your time. :) for any comments, questions and suggestions please email me at God bless to all of you. :) good luck.
ps. today its been two years that i have been sharing my thoughts with all of you. Thank you for joining me in my journey. :) happy birthday mr warren buffett. :)


budlab said...

Go KO! FYI on a new book. “The Four Filters Invention of Warren Buffett and Charlie Munger” is really about “decision framing.”
It examines each of the basic steps they perform in “framing and making” an investment decision. This book is a focused look into this amazing invention within “Behavioral Finance.” The genius of Buffett and Munger’s parsimonious four filters process was to “capture all the important stakeholders” in a “multi-variable” equation or formula. Imagine…Products, Enduring Customers, Managers, and Margin-of-Safety… all in one mixed “qual + quant” formula. Other important ideas are embedded in each chapter. The book can be used as a supplemental textbook in a Valuation or Decision Sciences course.

marcelino iii said...

thank you very budlab for informing us about the book. I will check it out. :) i hope you enjoy the blog. :) God bless

xuzhu said...

May I add that a brand name is only as good as its perceived value. (i.e. a brand name would matter if consumers would be willing to pay more that the cost of producing it.

Great post, chief!