August 31, 2006
Brands can be powerful assets. Just think of Disney movies, for example. If you're going to take the kids to a movie, odds are you'll give more consideration to a new Disney feature than features put out by unfamiliar names. If you're in the market for a new car, you'll likely have some strong and positive thoughts about Honda vehicles, but may have trouble seriously considering, say, a Pacco VBX 5000.
When it comes to cell phones, you probably think of cell-phone makers such as Nokia (NYSE: NOK ) , Motorola (NYSE: MOT ) , Samsung, and Sony-Ericsson (a joint venture between Sony (NYSE: SNE ) and Ericsson (Nasdaq: ERIC ) ). You might think that they've built great brand loyalty among their customers by now. You'd be wrong, though -- at least according to a recent survey by Harris Interactive. The future will likely be rife with cell-phone service providers offering their own brands of cell phones, so the folks at Harris asked people how likely they'd be to buy various cell phones:
- More likely to buy from a handset manufacturer: 19%
- More likely to buy from a wireless service provider: 27%
- Just as likely to buy from either: 54%
This suggests that cell-phone makers might want to focus more intently on strengthening and differentiating their brands, lest consumers start to consider cell phones mere commodities. Intel (Nasdaq: INTC ) is famous for having made a strong name for itself via its "Intel Inside" campaign. Without it, most of us would likely have thought little about which company's chips reside in our computers.
In the meantime, as we go about our investing business, it's useful to remember how valuable a strong brand can be. That's certainly one of the things our Motley Fool Income Investor analyst Mathew Emmert looks at when he considers which compelling investments to recommend each month. (Grab a free trial of our Income Investor newsletter and see all his picks, which are ahead of the market by an average of 19% to 13%, last time I checked.) A strong brand builds competitive advantage.
You can gain additional insights in these articles:
Intel is aMotley Fool Inside Valuerecommendation, while Disney is aMotley Fool Stock Advisorpick.
Longtime Fool contributorSelena Maranjiandoes not own shares of any companies mentioned in this article.The Motley Fool has a fulldisclosure policy.