Boy Wirat
I have spent the last week reading "Shoe Dog", Phil Knight's memoir of how a runner on the Oregon University track team built one of the great shoe companies in the world, in Nike (
Just Do It! Brand Name Lessons From Nike's Troubles
Summary
- The broadest definition of a brand name is that it is recognized and remembered, either because of familiarity or association.
- Brand name value can show up in almost every input, with a more recognizable brand name leading to more sales, more pricing power (higher margins), and perhaps even less reinvestment and less risk.
- The pricing premium effect of brand name also becomes an effective device to strip companies that hold on to the delusion that their brand name values have value, long after they have lost their shine.
- The benefit of building a strong brand name is that it remains one of the most sustainable competitive advantages in business, with the advantages often lasting decades.
I teach corporate finance and valuation at the Stern School of Business at New York University. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. As a result, I happen to be at the intersection of three businesses, education, publishing and financial services, that are all big, inefficiently run and deserve to be disrupted. I may not have the power to change the status quo in any of these businesses, but I can stir the pot.
Please note that the article that you are reading here was originally written on my blog and is republished in Seeking Alpha and other forums. Consequently, I neither track nor respond to comments here. I am sorry! ==Editors' Note: Seeking Alpha monitors Dr. Damodaran blog and posts relevant articles on his behalf.