Capitalize On Your Ingredient Brand

Ingredient Branding

One of the best examples of how a brand is born is the DuPont Companies’ Lycra® Spandex fiber. When made into a fabric, the fiber provides both stretch and recovery to the garments produced. It was quickly commercialized into women’s swimsuits, hosiery, and lingerie, and then over time into a variety of “fit” garments, including women’s tops, jeans, and leggings. A whole new market for Lycra emerged, but was not fulfilled in the higher performance areas for sports and exercise activities. We selected Lycra as an example of a brand that has gradually faded in recognition over time.

Intel® is the most famous of all ingredient brands that has enjoyed a long life. We will look at what Intel has done to maintain success throughout its ups and downs.

How Ingredient Brands Are Born

...and How to Capitalize on Them

When an upstream manufacturer develops a new breakthrough product, they diligently commercialize to increase market acceptance of the product. Since the product is a breakthrough, over time, it is accepted by direct customers and often becomes famous for the benefits it brings to the downstream market. Sometimes, it is also accepted by consumers because of the publicity generated by the product. The name the manufacturer gives the product is generally intended to both simplify the conversation and assist purchasing in requesting the right product—a common practice in industry.

As the product becomes famous, especially downstream and with consumers, its name not only becomes more recognizable, but also develops its own meaning. It becomes an ingredient brand. Sometimes, the ingredient brand is even used to describe the final product, especially when final product brands are weak. Many weak product brands will actually incorporate the ingredient brand onto their label.

Strong product brands are more reluctant to use the ingredient brand, out of concern about compromising their strong brands. However, smart branders take full advantage of the popularity of the famous ingredient brand.

Managing an ingredient brand is not easy. It is often much more complex than managing a consumer brand. Ingredient branders face several challenges:

Ingredient Brand Life Cycle

Ingredient Brand Evolution and Deterioration

This model represents the typical stress between managing brand, product, and price.

1. Supplier develops a breakthrough product and initiates commercialization process
2. Product name becomes famous downstream of direct customers
3. Supplier mismanages the brand; competitive product intensity increases

Ingredient Branding Strategy Simultaneous with Product Commercialization

This model demonstrates the importance of building the brand value from the very genesis of the product commercialization. Although some price pressure arises, the brand has taken on greater downstream importance.

1. Supplier develops a breakthrough product and initiates the commercialization process (as in the previous example)
2. Product is branded, and a branding strategy is initiated along with the commercialization
3. Brand is priced to value and never compared to competitive products
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