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If you work backwards from what generates revenue (purchases) in the travel industry you'll find that marketing drives decision making more than the underlying

If you work backwards from what generates revenue (purchases) in the travel industry you'll find that marketing drives decision making more than the underlying airplanes, trains etc. Physical assets are a known quantity for better and for worse. They intrinsically depreciate. On the other hand, Brands grow over time from word of mouth and other marketing, so long as their final product is at least average.

deleted 9y ago
[deleted]
shimon 9y ago
Right. Another way of highlighting the absurdity of dismissing things like Priceline as non-assets is to look at the history of computing. Microsoft commoditized PC hardware, and became tremendously valuable selling the dominant OS. Google is doing the same thing with Android. Is Windows or Android not an asset? Is it not the dominant asset in terms of value, even if manufacturing electronics at scale is larger in physical terms?
- dragontamer 9y ago
  > Microsoft commoditized PC hardware No. Tandy (aka Radio Shack), Dell, Compaq, and so forth commoditized PC Hardware. Microsoft made the OS a commodity, reducing the cost of an OS from thousands of dollars to only $100. Android / iOS have done the same thing except reduced the cost to $0. The hardware manufacturers don't make as much as the software guys. Because people and habits are tied to the software, not hardware.
  - sbarre 9y ago
    I think OP meant that Microsoft commoditized PC hardware through software, in other words by making Windows the thing that people wanted to have, and the hardware under it could be interchangeable. Most people didn't care if they had a Dell or a Compaq, as long as it ran Windows. So in this case: I don't care what hotel I stay in or who rents me a car, as long as I know that through Priceline I'm getting a good deal.
    - dragontamer 9y ago
      I personally didn't read it like that, but your interpretation makes sense. After thinking about it, I think your interpretation of the post is superior.
    - shimon 9y ago
      Yes, that's what I meant. Windows was a commoditizing force on PC hardware makers. Microsoft did the commoditizing here by taking their market power that came from controlling the thing people wanted most, and enforcing standards that hardware makers had to meet in order to reach the market MS controlled. It's the same in travel, where the airlines and hotels are selling commodity products, and the high value is in the brokers people trust to select among the commodities. But the brokers here are also in still competitive positions, because it's still easy for consumers to switch compared to something like an OS or social network.
anigbrowl 9y ago
Brands have no inherent value though; they're the consumer equivalent of religious icons. They cease to have meaning if they're not kept alive by advertising and can be destroyed by a single screw up or undermined by a clever emme. Marketing people sell value, they don't create it.
- jgalt212 9y ago
  don't tell that to Warren Buffet
  - anigbrowl 9y ago
    Warren Buffett is a wonderful person but he's the product of a mixed economy with strong institutions. My point (which could have been better made) is that brands depend heavily on social infrastructure for their survival Put it this way, suppose the C-suite and the board at Priceline went insane and wiped all their own servers before leaping out of their penthouse windows. It would disrupt the travel industry, but it wouldn't be that difficult to build another price aggregation network - the infrastructure is already there. And a year later, nobody would care. Consumers aren't nearly as invested in brands as marketing people like to imagine, they're just lazy and stick with whatever works OK. Can you imagine consumers feeling sad about the demise of Priceline or any other major brand? If Geico went out of business I'd feel a little bit of nostalgia for those animated gecko commercials and might reminisce that they were a good company to do business with, but that's about it.
- fitchjo 9y ago
  In the eyes of who? To the company and its owners, if my brand allows me to sell an equivalent widget for a higher margin, how is that not value? Just because value can be created or destroyed by a single action doesn't mean that value is somehow less valuable. To the user, if I derive greater pleasure because I believe I have bought a more valuable product (attributable only to the brand), just because there is an equivalent widget out there, does that somehow discount my pleasure? What even, is the basis on which, in this hypothetical scenario, we have determined the widgets are equivalent? Surely there is some subjectivity that would be driven by people's opinions, influenced directly or indirectly by brands, in that decision.

deleted 9y ago

[deleted]

shimon 9y ago

Right. Another way of highlighting the absurdity of dismissing things like Priceline as non-assets is to look at the history of computing. Microsoft commoditized PC hardware, and became tremendously valuable selling the dominant OS. Google is doing the same thing with Android. Is Windows or Android not an asset? Is it not the dominant asset in terms of value, even if manufacturing electronics at scale is larger in physical terms?

dragontamer 9y ago
> Microsoft commoditized PC hardware No. Tandy (aka Radio Shack), Dell, Compaq, and so forth commoditized PC Hardware. Microsoft made the OS a commodity, reducing the cost of an OS from thousands of dollars to only $100. Android / iOS have done the same thing except reduced the cost to $0. The hardware manufacturers don't make as much as the software guys. Because people and habits are tied to the software, not hardware.
- sbarre 9y ago
  I think OP meant that Microsoft commoditized PC hardware through software, in other words by making Windows the thing that people wanted to have, and the hardware under it could be interchangeable. Most people didn't care if they had a Dell or a Compaq, as long as it ran Windows. So in this case: I don't care what hotel I stay in or who rents me a car, as long as I know that through Priceline I'm getting a good deal.
  - dragontamer 9y ago
    I personally didn't read it like that, but your interpretation makes sense. After thinking about it, I think your interpretation of the post is superior.
  - shimon 9y ago
    Yes, that's what I meant. Windows was a commoditizing force on PC hardware makers. Microsoft did the commoditizing here by taking their market power that came from controlling the thing people wanted most, and enforcing standards that hardware makers had to meet in order to reach the market MS controlled. It's the same in travel, where the airlines and hotels are selling commodity products, and the high value is in the brokers people trust to select among the commodities. But the brokers here are also in still competitive positions, because it's still easy for consumers to switch compared to something like an OS or social network.

anigbrowl 9y ago

Brands have no inherent value though; they're the consumer equivalent of religious icons. They cease to have meaning if they're not kept alive by advertising and can be destroyed by a single screw up or undermined by a clever emme. Marketing people sell value, they don't create it.

jgalt212 9y ago
don't tell that to Warren Buffet
- anigbrowl 9y ago
  Warren Buffett is a wonderful person but he's the product of a mixed economy with strong institutions. My point (which could have been better made) is that brands depend heavily on social infrastructure for their survival Put it this way, suppose the C-suite and the board at Priceline went insane and wiped all their own servers before leaping out of their penthouse windows. It would disrupt the travel industry, but it wouldn't be that difficult to build another price aggregation network - the infrastructure is already there. And a year later, nobody would care. Consumers aren't nearly as invested in brands as marketing people like to imagine, they're just lazy and stick with whatever works OK. Can you imagine consumers feeling sad about the demise of Priceline or any other major brand? If Geico went out of business I'd feel a little bit of nostalgia for those animated gecko commercials and might reminisce that they were a good company to do business with, but that's about it.
fitchjo 9y ago
In the eyes of who? To the company and its owners, if my brand allows me to sell an equivalent widget for a higher margin, how is that not value? Just because value can be created or destroyed by a single action doesn't mean that value is somehow less valuable. To the user, if I derive greater pleasure because I believe I have bought a more valuable product (attributable only to the brand), just because there is an equivalent widget out there, does that somehow discount my pleasure? What even, is the basis on which, in this hypothetical scenario, we have determined the widgets are equivalent? Surely there is some subjectivity that would be driven by people's opinions, influenced directly or indirectly by brands, in that decision.