Ben Gilbert

So welcome to the party.

This section, Power, is gleefully ripped from a book called Seven Powers by our friend Hamilton Helmer.

And in it, he examines what of these seven possible powers is it that enables a business to achieve persistent differential returns, or put another way, to become more profitable than their nearest competitor and do so on a durable, sustainable basis.

And the seven are counter-positioning, scale economies, switching costs, network economies, process power, branding,

and cornered resource.

Yeah.

Coke was mostly getting counter-positioned.

Yes.

So...

This is a business of scale economies.

Everything about this business is scale economies.

The amount that they can amortize their advertising over, it's just an amortization scale economies business, period.

They can manufacture and distribute things cheaper than you can to way more people than you can, and good luck catching up.

And they're going to have another hundred years in them because of that advantage that they've built up.

All right, so while we're there, let's do branding.

Because I think this is so interesting.

Normally, brand power is measured by...

The amount, if you provide someone with two identical things, how much more are they willing to pay you?

And that delta, you know, the Tiffany over the generic piece of jewelry is how you quantify their brand power.

Coke doesn't sell things in general that are more expensive.