A branding lesson every investor can learn from…
| From the desk of Miles Everson: Investing has provided many individuals with the opportunity to gain financial independence for decades. That’s why every Wednesday, I talk about this activity in the hopes of helping readers achieve financial security. Today, let’s focus on a concept that’s enabled many companies to enjoy long-term growth and stability. Continue reading below to know more! NOTE : Professor Joel Litman is a good friend of mine. He’s also one of my trusted experts when it comes to finance and investing. That’s one of the reasons why I’ve dedicated this particular day of the week to feature investment-related insights in this newsletter. On top of what we’ll discuss in a while, allow me to share with you a recently posted video clip of Professor Litman talking about China’s rare-earth dominance. Here, he puts an emphasis on how small defense stocks are bypassing China’s supply chain and creating opportunities to challenge the industry’s giants. Watch more about this on YouTube. Click here. |
In the 1940s, Candido Jacuzzi’s son, Ken, developed rheumatoid arthritis, leaving him with persistent and crippling joint pain and stiffness. To manage the symptoms, Ken’s doctor recommended hydrotherapy to keep his body warm and his joints flexible. The treatment worked, but there was a problem: The constant drives to the hospital were a logistical problem for the Jacuzzi family. That’s when Candido stepped in. Not only did he invent something that eased his son’s pain but it also turned Jacuzzi into a household name. Necessity is the Mother of Invention
Candido came from a family of Italian immigrants who settled in the Bay Area. The family ran a business that specialized in building agricultural water pumps. The Jacuzzi family sold those pumps throughout California’s San Joaquin Valley. This also meant Candido knew a thing or two about water pumps. Going back to Ken’s hydrotherapy sessions… When Candido looked closely at the hospital’s hydrotherapy equipment, he realized it wasn’t nearly as advanced as it appeared. So what he did next was build a portable version known as the J-300. This contraption turned his family’s bathtub into a therapeutic whirlpool. For Ken, it was a breakthrough. Yet for Candido, the invention represented an even bigger opportunity. After Candido showed the design to Ken’s doctors, they agreed that plenty of other people could benefit from hydrotherapy at home. He convinced his family to take the pump to consumers. The Jacuzzis launched a high-profile promotional push, including giving the product away on the nationally syndicated TV show “Queen for a Day.” The family name became a sensation almost overnight. Celebrity endorsements followed, and the company expanded into Canada, Brazil, and even Italy. Over 60 years later, the Jacuzzi name has transcended the brand itself. The word “Jacuzzi” no longer refers to a specific brand. Instead, it’s used to refer to any hot tub. This means even though competitors can build their own hot tubs or hydrotherapy products, they cannot replicate the brand equity Jacuzzi enjoys. Why Brand Strength is A Real Advantage in the World of Business Brand strength is one of the most powerful advantages a business can have over its competitors. It’s because it often serves as a tiebreaker, nudging customers towards one product over another, one service over another, or even one brand over another. Alternatives to a product or service can exist, yet if a company is able to build such a strong brand equity, customers will choose its offerings over others every single time. … and according to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Officer of Altimetry Financial Research, strong branding can elevate a company’s pricing power. In other words, consumers would rather pay more to own a name they know associate with quality and reliability. Jacuzzi became deeply ingrained in its target customers’ consciousness, enabling it to compound long term and enjoy decades of strong brand equity. The takeaway for investors? Strong branding is something that ought to be taken into consideration when evaluating individual companies and opportunities in the market. Jacuzzi shows that brands synonymous with a product category tend to compound for the long-term and are much better positioned to deliver value. Hope you’ve found this week’s insights interesting and helpful. Stay tuned for next Wednesday’s The Independent Investor! In high-performance environments, whether in global markets or elite engineering, the pressure to deliver NOW is relentless. Learn more about why sometimes, it pays to fall behind in next week’s article! |
Miles Everson
CEO of MBO Partners and former Global Advisory and Consulting CEO at PwC, Everson has worked with many of the world's largest and most prominent organizations, specializing in executive management. He helps companies balance growth, reduce risk, maximize return, and excel in strategic business priorities.
He is a sought-after public speaker and contributor and has been a case study for success from Harvard Business School.
Everson is a Certified Public Accountant, a member of the American Institute of Certified Public Accountants and Minnesota Society of Certified Public Accountants. He graduated from St. Cloud State University with a B.S. in Accounting.
