Warren Buffett and Secrets of Management - 40
Warren Buffett knows as much as anybody the power of being a brand company rather than a commodity company. Berkshire Hathaway (BRK-A) itself is a brand. Even Buffett is a brand.
One of the reasons he hasn't split the stock, is so he can attract people that understand the value of a brand and its long-term value. He has no interest in the "players" that bounce in and out of stocks and cause a lot of unconnected price fluctuations.
Think of the power a brand has especially with companies that enter fields where the product or service must be consumed on a consistent basis. That's why Buffett buys the types of companies and management that he does. Companies that operate in this way already have an affinity to the Buffett way of doing things. It's not that hard of a sell to become partners.
Another powerful advantage to branding in these types of businesses is that the use of the product or service itself causes you to think of the brand all the time. If you use Gillette, obviously you'll think of them right away when you need to replace a razor or blades. They've branded themselves into you.
The same if you're a Coca Cola (KO) fan. The minute you want a soft drink, they immediately come to mind and you buy them over and over again.
While all companies should work at branding and differentiation, those that offer replaceable products and services have an ongoing goldmine at their disposal.
Anyone that has a brand name, and builds products and services around that name that need to be used over and over again, has a competitive advantage that can be tapped again and again for years to come.
Other Buffett Resources:
Investment Whiz Kid: Buffett Amasses a Fortune
Management Styles - The Buffett Way: Learn from the maestro himself
Brand names Commodity companies
THE REAL GENIUS OF WARREN BUFFETT
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