INGREDIENT BRANDING

BY: Gautam Donga

Definition: An ingredient branding is exactly what the name implies: An ingredient or the component of the product that has its own brand identity.

Ingredient branding is the special case of the co-branding. It Involves creating brand equity for materials, components or parts that are necessarily contained within other branded product. Ingredient branding attempts to create sufficient awareness and performance for their product such that consumers will not buy a Host product that does not contain the ingredient.

Examples:
Intel Inside, Diet soft drinks with NutraSweet, Stereos with Dolby noise reduction. Boeings 787

WHAT ARE THE REQUIREMENTS FOR SUCCESS IN INGREDIENT BRANDING?

1. Consumer must perceive that the ingredient matters to the performance and the success of the end product. 2. Consumer must be convinced that not all ingredient brands are the same and that the ingredient superior. 3. A distinctive symbol or logo must clearly signed to consumers that the host product contains the ingredients.

4. A coordinated pull and push program must help consumer understand the importance and the advantage of branded ingredient. 5. The ingredient is highly differentiated, usually supported by patent protection, and so adds an aura of quality to the overall product. 6. The ingredient is central to the functional performance of the final product

IS THE INGREDIENT MARKETING FOR SUCCESS OR DISASTER?

If the host product is:

New/has

low awareness Ingredient brand provide quality advantage

The ingredient branding strategy can be highly effective.

For the product that :

Enjoys a premium image High customers expectation

Its best to avoid ingredient branding.

BENEFITS OF INGREDIENT BRANDING

1. Ingredient branding can enhance the:

Image. Perceived quality. Credibility of the Host product.

2. Ingredient branding can provide immediate brand recognition and a "ready-made" audience for a new product. 3.It can boost differentiation by giving the host product a distinct characteristic that is difficult for competitors to imitate.

5. When an ingredient or component is the point-of-entry to your product category, ingredient branding becomes the only viable course of action. 6. Ingredient branding can help companies achieve significant efficiencies because often the supplier and the manufacturer will share production, promotion, advertising and R&D costs. 7. In addition, a well-known ingredient brand can make highly competitive distribution channels more accessible.

DRAWBACKS OF INGREDIENT BRANDING

1.

The ingredient brand's image could overshadow the product's brand identity or conflict with its core values. Unless consumers are convinced that the ingredient truly adds value or represents a genuine product innovation, they may not be willing to pay the additional price necessitated by the cost of licensing the ingredient. consumers can become skeptical of the additional promise of an ingredient, especially if the product is already a category leader. If licensing is not controlled, both the ingredient and your product are at risk of becoming generic.

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CASE STUDY INTEL INSIDE

Twelve years ago computer chips, in the eyes of consumers, were a generally unknown component of PCs - a commodity product. From a competitive standpoint, a computer chip is a typical commodity. In 1980s Intel developed the chips which set the standard for personal computing. but Competitors rapidly adopted the same naming convention, and Intel's product names - the 286, 386 and 486 could not be protected.

Intel already had an established reputation as a quality producer of microprocessors amongst the OEMs. However, Intel needed to differentiate itself from its competitors and build a consumer brand. Intel believed it could position its chips as a premium product, which it could in turn sell at a premium price to computer manufacturers. "Intel Inside" ingredient branding strategy

The name "Intel Inside" became the first trademark in the electrical component industry. This case study demonstrates how a successful, ingredient brand campaign can transform a commodity product into a valuable consumer brand with a brand value.

ANY QUESTIONS??

THANK YOU