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The Nature of ValueHow to Invest in the Adaptive Economy$
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Nick Gogerty

Print publication date: 2014

Print ISBN-13: 9780231162449

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162449.001.0001

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How Moats Affect Cost, Competition, and Customer Forces

How Moats Affect Cost, Competition, and Customer Forces

Chapter:
(p.188) Chapter Eleven How Moats Affect Cost, Competition, and Customer Forces
Source:
The Nature of Value
Author(s):

Nick Gogerty

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231162449.003.0011

This chapter explains how advantageous moats can be measured, and how they can expand or erode over time. It also looks at the various types of moats and at the competitive advantages—such as a strong brand or a geographic edge—that can help firms stay on top. Moats reduce the selective competitive pressures associated with cost, competition, and customers. Some moats reduce pressures in just one area, whereas others can impact all three. To survive, a firm's cost, price, and the value delivered to the customer have to obey the Cost < Price < Value delivered relationship. Types of moats include competitor-altering and consumer-altering moats. Competitor-altering moats include physical geographic moats, patent moats, and government-restricted or limited-concession moats. Consumer moats fall into three categories: physiological moats, sunk cost or switching cost moats, and belief or perception moats.

Keywords:   moats, value, costs, competition, customers

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