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Concept Of the Day
#1 - Moats
Q. What is a moat?
It's simply a long term/sustainable competitive advantage that a business can have to maintain to protect it's current and future profits as well as market share from its competitors.
#1 - Moats
Q. What is a moat?
It's simply a long term/sustainable competitive advantage that a business can have to maintain to protect it's current and future profits as well as market share from its competitors.
Q. What are some examples of moats?
~ Branding - If a brand is popular and has significant consumer mindshare, it has pricing power. This kind of advantage takes time to build as it involves consumer trust
~ Branding - If a brand is popular and has significant consumer mindshare, it has pricing power. This kind of advantage takes time to build as it involves consumer trust
~ Network effects - As creators post more content on a particular social media platform, it encourages more users to use that platform, which in turn drives creators to develop more content, which drives more users,and so on.
~ Switching costs - These are the costs that a user would incur while switching to another brand or product. The cost could be related to money or even simply the hassle of finding a replacement
~ Low-Cost Advantage - This is as simple as it sounds. The lowest cost producer has an advantage over its rivals since it can undercut them on prices and attract more customers.
~ Legal or Regulatory - This could involve patents or just regulatory licenses that allow a particular company to exclusively sell a product
