Second, the conversion cost.
Third, the network effect. The network effect is related to users. The more users, the wider the moat. Network effect usually plays a role in the information industry, because the number of users of such enterprises is expanding rapidly. Another characteristic of network effect is that the increment of value is greater than that of nodes. When a node or a user is added, the overall value increases faster, which is an exponential image.
Fourth, the cost advantage. The first three types of moats are mainly aimed at the pricing power of enterprises. For enterprises, low cost is a rich moat. There are three kinds of cost advantages: 1, process advantage, when enterprises use process innovation to establish cost advantages, but new enterprises can not copy this process quickly, enterprises will gain short-term advantages; 2, superior geographical location, this advantage is relatively lasting, and it is difficult for other enterprises to replicate; 3. Unique resource advantages, such as oil and gas, have strong advantages before the resources are exhausted.
Several moats bring core competitiveness-pricing power. When an enterprise has pricing power or bargaining power, it is enough to cope with various changes in the market. When the cost rises, it can use the brand premium to raise the price, and competitors will be afraid to enter this market because of the high transfer cost.
Several misunderstandings:
First, high-quality products are not equal to moats, but things that are difficult to be replaced.
Second, the absolute scale of the enterprise is not equal to the moat, but the relative scale is. The enterprise is absolutely small in scale, but its relative scale is higher than that of its competitors. This enterprise also has a moat, such as a leading enterprise in a certain segment. Therefore, it is safer to catch big fish in a small pond than in a big pond.
Third, excellent management is not a moat, but an efficient management process.