Hey, how's everybody doing out there? This is Preston Pish, and I'm going to be talking to you about competitive advantage during this week's in-between-a-sode.

So during the next couple of in-between-a-sodes, we're going to be talking about the importance of competitive advantages,

and why every business needs to be thinking about a way to increase their competitive advantage.

So this week's discussion is going to be covering the reasons why a brand is an enormously powerful competitive advantage.

So I'm going to start off with a story, and this is a story that Warren Buffett often tells, so I'm going to make sure that he gets credit for this.

So he says, let's imagine that your wife is shopping at a store, and she comes across a stack of discount DVDs for the kids.

She's been wanting to buy a new movie for the upcoming vacation, so the children have something to watch in the car.

When she's looking through the dozens of choices, she doesn't really recognize any of the titles.

So instead, what she does is she immediately selects the one that has a Disney emblem stamped on the outside of the case, and that's the one that she selects.

So what just happened with that story?

And what we can say generally is that she made a selection completely based off of the brand.

You see, a brand is an enormous competitive advantage that many beginners fail to value when they're first starting out with investing.

And the difficulty in valuing a brand is that it's not something that's tangible that you can really necessarily put a number to.

That means it's very difficult to quantify a dollar figure to this real value that's being added by the company by having this brand.

So when we look at the different types of competitive advantages out there, there's a whole bunch of them, and these are what we're going to be covering in the following weeks in between the sods.

But just the name a few of them. So the brands are a competitive advantage, trade secrets like a Coca-Cola, this stickiness factor.

Like using Microsoft Office as a perfect example of stickiness.

Patents are intellectual property or commonly referred to as IP.

Volume of sales which produce a price advantage like at Walmart or at Amazon.

Or an optimized distribution network which produces a price advantage also like Amazon.

So those are some of the big ones. Those are what you're really striving for in a business because whenever you have that, you can have a margin built into your product that most people can't buy.

That most people can't compete with which gives you that competitive advantage.

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