Ingredient branding

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. 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. On the other hand the producer will only decide on the usage of the ingredient - or at least take it into account in the communication policy - if the image of this ingredient will have an effect on the consumer, meaning a positive influence on his or her buying decision.

Examples

• Intel Inside for processors and chipsets in computers of various producers
• 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

Relationship with cooperative advertising

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.

To investigate this question, Juan Zhang and his co-authors introduced a dynamic cooperative advertising model in an assemble supply chain where the end product manufacturer purchases components from two suppliers. Results show that the reason that there is seldom supplier providing a cooperative advertising program to his manufacturer is that his unit profit margin is too low. They also show that some suppliers could offer their common manufacturer a cooperative advertising program cooperatively.

See also

Co-branding

References

• Koler, Philip; Pförtsch, Waldemar: Ingredient Branding – Making the Invisible Visible, Springer 2010
• Esch, Franz-Rudolf: Strategie und Technik der Markenführung, Verlag Vahlen 2008
• Pförtsch, Waldemar; Müller, Indrajanto : Die Marke in der Marke - Bedeutung und Macht des Ingredient Branding, Springer 2006
• Havenstein, Moritz: Ingredient Branding, Deutscher Universitätsverlag 2004
• Malaval, Philippe: Strategy and Management of Industrial Brands Springer 2003
• Juan Zhang, Qinglong Gou, Liang Liang, Xiuli He: Ingredient Branding Strategies in an Assembly Supply Chain: Models and Analysis , Int. J. Production Research. DOI:10.1080/00207543.2013.825747