What Are Ingredient Brands?
In an earlier blog post, I mentioned that every upstream innovation needs a downstream innovation to be successful. Taking that statement one step further, the upstream innovation can be even more powerful through ingredient branding. Ingredient brands are those upstream products that not only add functional value, but their logo on branded products or services adds its own brand power to the branded product. They add to customer loyalty, evoke customer preference, and support premium price points. An ingredient brand not only adds value to a host brand’s equity, but as markets mature, it can also create or enhance differentiation.
Intel® is arguably the most famous of all ingredient brands that has enjoyed a long and continuing life. Others include Microban®, Kevlar®, and Goretex®.
How Ingredient Brands Are Born
When an upstream manufacturer develops a new breakthrough product, they diligently commercialize and promote identity in order to obtain increasing market acceptance of the product. Since it is a breakthrough, the branded product becomes accepted by direct customers and often becomes famous for the benefits it brings to the downstream market. When promoted properly, it also becomes desirable to consumers because of the publicity it generates as a source of “new” perceptions for older brand names that incorporate it into their product lines.
As a new ingredient brand becomes familiar among downstream specifiers, the name not only becomes more recognizable, but it also develops its own meaning. The ultimate constituency that fosters an iconic meaning for any brand is consumers who assign daily-life significance to it. At that point—when a labeled component of an end product like a computer or fashionable garment becomes a familiar name that influences consumers’ choices—an ingredient brand is born.
The Top 5 Challenges of Managing an Ingredient Brand
The key to achieving this marketplace status is managing the brand well beyond its functional value. Accomplishing this is much more complex than managing a consumer brand. Ingredient branders have distinct challenges which must be met in order to fully capitalize on ingredient brand potential for value. They must do the following:
- Educate their internal organization on how a brand is different from a product and the importance of building brand equity
- Effectively communicate the brand downstream from the direct customer without creating unmanageable friction with that customer
- Articulate an integrated marketing strategy with a balanced emphasis beyond product performance value to include benefits and emotional brand image that drive differentiation and preference
- Coordinate all management functions to contribute to consistent brand message—to “walk the brand talk” in all decisions. Always address brand misuse
- Capture and retain price premium, avoiding the temptation to trade off long term premium for short term share
In summary, apply a branding mindset at the onset of product commercialization. When doing the market validation concept research early in the product concept phase, design it not just to learn what end user respondents like or dislike about the concept, but also to capture how the respondents talk about the concept.
What is your experience with ingredient branding? Leave a comment and let us know.