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Turfscape (42.87)

Brand Loyalty...yeah, we got that!

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March 24, 2010 – Comments (2) | RELATED TICKERS: AAPL , HOG

I follow Harley-Davidson, Inc. (HOG) fairly closely. I find the company fascinating. First, because I happen to love riding...but also because of the insane loyalty of HOG customers. It's cited so many times: you can brag about brand loyalty when your customers permanently emblazon their body with your logo. That cult following is what The Buffett would call a moat.

Another company that I find fascinating is Apple (AAPL). And, man-oh-maniszewitz, they are coming awfully close to the status of HOG for fervor among fans. Exhibit A: Apple Store is 5th Most Photographed Landmark in N.Y.

So, people visiting New York...the Capital of capitalism, the pinnacle of Liberty, the embodiment of the Pursuit of Happiness...make it a plan to take home memories of the Empire State Buidling, Rockerfeller Center and the 5th Ave. Apple Store! Not the company's headquarters...ONE of their RETAIL outlets!

Moat? Check!

2 Comments – Post Your Own

#1) On March 24, 2010 at 9:21 PM, ChrisGraley (29.70) wrote:

HOG = yes

AAPL = no

AAPL is in vogue, but there is not much of a moat in the technology hardware sector.

In fact I've been accumulating Microsoft lately, because I think their Courier product is game changing.

I think it will sell circles around that giant I-phone that Apple decided to name after a tampon. 

 

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#2) On March 24, 2010 at 11:25 PM, Turfscape (42.87) wrote:

ChrisGraley wrote:
"AAPL is in vogue, but there is not much of a moat in the technology hardware sector."

There's not much of a moat in the motorcycle engine sector, either. In fact, Ducatti, BMW, Triumph and others will beat the pants off of Harley-Davidson in most categories. The moat is in the brand experience. Harley-Davidson created a lifestyle that surrounds their product...either you start by purchasing the shirts and jackets and build into the world of riding and eventually owning a beautiful piece of machinery, or you enjoy riding and eventually try a Harley-Davidson, which leads you to purchase the parts, accessories and clothes. But, everything is designed specifically to give you that feeling of Harley-Davidson...that dream of open roads and mythical, cowboy or rebel-punk lifestyle. Reality matters little when you have that feeling.

Apple has done something similar. They've created a whole unified experience that goes beyond computing power. It goes beyond code. People like to short sell Apple (figuratively speaking) because someone else is putting out a similar product with faster processing, or more memory, or a better graphics card or whatever...but that's not the moat around AAPL. It's the brand experience. It's clean, sleek design coupled with small niceties in the user interface that they make sure you encounter frequently. It's that you purchase your music, music player, phone, software and computer from one maker. It's that there's a store that reflects everything they want to say about their product...and what they say is NEVER best technological achievement, or best price...it's best experience. 

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