To Identify Pricing Power, Compare Companies Like This - Chart Of The Day 10 August 2018 - Equitymaster
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To Identify Pricing Power, Compare Companies Like This
Aug 10, 2018


Talking about brands, there is a huge difference between a strong brand and a weak brand.

A strong brand commands pricing power and is a leader in the industry in terms of profitability.

A weak brand is often not a leader in terms of profitability.

The basic difference is - 'Pricing Power'.

The company we met recently in Gujarat is the second largest player in terms of revenue. However, in terms of profitability it is the market leader.

The reason is quite simple. The brand recall for this company is very strong in regions of Gujarat and Rajasthan, which has helped it to command a strong 'Pricing Power'.

This pricing power along with the increased efficiencies in the operations (owing to scale), has helped the company to command industry best operating margins.

We at Smart Money Secrets and the super investors we track are always on the lookout for companies with economic moats. And the first tenet of a moat is - Pricing Power.

Data Source: Ace equity, Company

This Chart Of The Day was published in The 5 Minute WrapUp - On the Road to Find This Month's Smart Money Secrets Recommendation

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