ingredient-branding : Marketing management concept

In marketing, ingredient-branding is creating a brand for an ingredient or component of a product,

to project the high quality or performance of the ingredient.

Ingredient-branding takes a special position in marketing, as it cannot be clearly allocated to either industrial or consumer goods marketing.

A major characterislic of a brand able ingredient is that it is critical to the success ofthe end product

On the one hand, the consumer is the end-user of the ingredient, but at the same time is not part of the buying decision for the component, as this is up to the producer of the end product.

if the image of this ingredient will have an effect on the consumer, meaning a positive influence on his or her buying decision.

then producer will only decide on the usage of the ingredient - or at least take it into account in the communication policy –

Ingredient branding is a marketing strategy where a component of the business is branded as a separate entity. This helps to add more value to the parent company and make their product/service seem superior to its competitors.

In this way, Ingredient branding allows for trust and faith in the entire product based on its component. Ingredient branding has been popular in automobiles where the engine is branded at first in order to display the power of the automobile.

Examples:-

Intel Inside for processors and chipsets in computers of various producers

Intel chipsets and processors are branded for selling either laptops or CPUs.

Dolby brand signals high-quality audio.

The PC (Personal Computer) and Intel together revolutionized the electronic industry. “Intel Inside” logo was the first Ingredient Brand to become successful globally. However, in 2006 Intel announced a radical shift of company focus and change to master branding.  They would provide not only the silicon for the telecom switchboards, but supply . . . . single board computers, platforms, including all the accessories. Intel would provide all the necessary products and tools that a telecommunications company needs in order to make the job easier.

Intel is no longer just an Ingredient Brand but it is now a “top shelf” brand.

It works because, in general, consumers will pay more for a branded product (name brand vs. generic). Consumers trust established brands. However, in a sea of established brands, the point of differentiation is key. And with growing customer sophistication, specifically in terms of consumer research, an ingredient branding strategy adds a layer of value to a product’s overall proposition. To connect with consumers brands need to create visible value, and by adding a branded ingredient, they can clearly show additional value.

In his book Ingredient Branding: Making The Invisible Visible, Philip Kotler praises Intel for championing the ingredient branding concept:

 Intel owes its corporate success to their “Intel Inside” campaign. In the early 80’s however, when they created the ingredient branding concept, it seemed like a gamble. At the time they had a mere $500 million in sales, and yet they invested $110 million in their ingredient branding campaign over a period of three years and drove their concept and the business forward.

The ingredient must be highly differentiated in order to add value to the overall brand. This means the ingredient should have a separate name and logo and overall purpose, because the added value comes from the extra identity.

The main brand should be well established in the market before employing an ingredient branding strategy because the consumer needs first understand the core brand and then find additional value in the ingredient. An ingredient branding strategy would be a challenge for a start-up company with little name recognition as it would cause confusion as to which brand was an ingredient of which

 NutraSweet and Canderel, a brand name for the artificial sweetener Aspartame in the food industry (Coca-Cola light)

Teflon as a coating for pots and pans and Gore-Tex for sportswear (both products are brand names for polytetrafluoroethylene)

Makrolon, a plastic produced by Bayer MaterialScience

Bitrex, a bitter substance discovered by MacFarlan Smith Ltd.

ClickTight as a car seat installation method by Britax

Microban for anti-microbial technology or additives

Dupont makes products that go into other products

Ingredient Branding Examples • Microban • Makrolon • GoreTex • Dolby Stereo • Nirosta Pfoertsch/Mueller

Master card visa and rupay in cc card debit card

Intel processors are used by majority of all PC manufacturers, thus a differentiation is no longer possible.

Ingredient Branding in Cars

  

Cooperative advertising can be used to stimulate the end product manufacturer to advertise the ingredient, though it is seldom done. While "Intel Inside" has success with this large cooperative advertising program, there are few cooperative advertising program offered by other ingredient suppliers.

How it works

Strong belief that the  Ingradient brand name adds value across the brand portfolio ◦ Increases purchase intent for new brands and existing brands with low awareness ◦

Linking the name to the strong brands strengthens the corporate reputation without negative impact on the brands

A product – endorsed, ingredient – branding strategy leverages corporate and product for mutual benefit is key to our success

Component Brands – Relates components which have identities of their own, within larger, more complicated product offering (Bose stereo in luxury cars)

Manufacturer initiated ingredient brands – Manufacturer uses established brands in an effort to communicate quality or value in its own products.

 Inputs are marketed by their producers as separate end products.( MRF being used by bike manufacturers)

 Goal is to build awareness and preference along the value chain for the suppliers brand of ingredient – everyone benefits

Better operating margins oFaster turning inventory oBetter consumer acceptance oAdditional promotional support • Consumer oSalient value-added in a readily identifiable way oSimplified purchase decision based on brand familiarity

Competitive advantage – overall quality enhanced

A clear, highly differentiating functional attribute -e.g. Teflon® = non-stick Dolby® = ultimate sound reproduction Intel® = microprocessor performance Goretex® = waterproof & breathable Paypal® = simple on-line cashless payments

 The ingredient should influence the performance or feature cf the host product like safety, comfort, health, etc. The ingredient’s influence ensures that consumers associate a benefit with the ingredient. For instance, Intel’s microprocessors influence to a high degree the performance of PCs.

 A supplier who applies Ingredient branding should offer a product that is a substantial innovation or has a significant advantage over existing alternatives. DuPont’s Teflon is an example of a major technological innovation