Moat and pricing power (1)

As we all know, Warren Buffett is very concerned about the ability circle of investors and the moat of enterprises. I recently learned a little about moat and pricing power.

( 1)

There is a joke.

A company wants to recruit employees, and high flyers applies for it.

Boss: What are your requirements for this job?

Applicant: The monthly salary is 65,438+10,000 yuan. I have the opportunity to go abroad for one month at public expense every year and help me rent a house at public expense.

Boss: What do you think of the salary of 200,000 yuan in January, going abroad at public expense for two months a year, and the company gives you a house?

Interviewee: Really? Great, you can't be kidding!

Boss: You made a joke first.

If this candidate is an incumbent emperor,

Boss: What are your requirements for this job?

Applicant: Company stock options with an annual salary of 5,000,000,250,000.

Boss: OK, welcome to join us.

A person's name is the shadow of a tree. Individuals have brand effect, and enterprises also have brand effect. When people realize that a commodity has higher value and are willing to buy it at a premium, the brand has a moat of intangible assets.

Some people have done experiments to put Coca-Cola and other brands of Coke together, so that deep lovers of Coca-Cola can taste it, which makes a difference and proves that there is no obvious difference in taste in real time. However, this does not prevent people from choosing Coca-Cola when buying.

(2)

People who travel abroad basically know that the prices of food and drinks in the park are generally higher than those outside the park. Take ordinary mineral water as an example, the price in the supermarket is generally 1-3 yuan, and the price in the park is 3-5 yuan.

Why is this happening?

According to the scarcity principle, when the supply exceeds the demand, it is the buyer's market, and the purchasing power lies with consumers. When the supply is less than the demand, it is the seller's market, and the merchants dominate.

In daily life, there are many choices. If the supply price of a supermarket is much higher than that of other stores, the passenger flow will be less and less over time.

On the contrary, in the tourist area, the management is doomed not to let many shops enter. Tourists must spend money when they are thirsty and tired after a long walk. Without much choice, they can only accept food and drinks with higher prices than outside.

Franchising or government permission, through some thresholds, restricts the entry and supply of merchants in certain fields, artificially causing monopoly and insufficient competition in the industry, so that the entered merchants have the right to price goods.

(3)

If you go to a distant and strange place for the first time, it is difficult to adapt to the local customs there at once, and language habits, food, clothing, housing and transportation may become big problems in life.

There is a common sense that as long as you can find a Dicos, McDonald's and KFC, you basically don't have to worry about food. Its mature network system over the years has made franchise stores all over the world. A unified brand image, with little difference in food taste, is always easy to remember and find.

Generally speaking, commodity profit = sales volume * (sales price-cost), and costs include direct costs (raw material costs, processing costs, transportation costs and service costs) and indirect costs (marketing, promotion and customer acquisition costs).

Enterprises that have formed a network effect can not only reduce direct costs through centralized large-scale procurement, but also effectively reduce the cost of acquiring new customers, thus highlighting their advantages in the competition and forming a virtuous circle.

(to be continued)