Locality goodwill

Locality goodwill - cats

Cats are attached to a home rather than to the owner of the house. If the owner leaves the house and somebody else moves in, many cats choose to return to the old home. Cats represent those territorial customers who go to the same shop or hairdressing salon whoever owns the shop. Just as cats prefer the old home, cat customers give rise to locality goodwill.

Cat goodwill isn’t inevitable. It depends on the design, location and furnishing of the premises and it doesn’t change when there is a change in ownership. This type of goodwill has stability and therefore its value is usually high. In some industries a premium called key money is paid to a landlord, or a current tenant, to secure a lease on a well-sited rental property. In today’s technology companies, where location isn’t important, cat goodwill also applies to customers who are loyal to a brand or the company name and reputation. They are highly invested in the brand equity – the virtual premises - of the product and will hardly ever switch their preference. The management and leadership team of the entity is less important.

Apple customers are a good example of cat goodwill. They are so highly drawn to the brand that no amount of better deals, price cuts or fancy features can lure them away. Steve Jobs and Steve Wozniak may come and go, but Apple users cling to their i-phones and Macs.