Ingredient brands are product components that not only add functional value, but their logo on a main branded product or service also adds to its own brand power to retain customer loyalty, evoke customer preference, and support premium price points. An ingredient brand not only adds value to the host brand’s equity, but in mature markets, 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®.

brand awareness

The Birth of an Ingredient Brand

When an upstream manufacturer develops a new breakthrough product, they diligently commercialize and promote its identity in order to increase the market’s acceptance of the product. Since the branded product is a breakthrough, it is 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.

The name the manufacturer gives the product is generally intended to simplify conversations with specifiers, product managers, and others whose beliefs in the product’s value prompt them to include it in production processes, and to assist purchasing agents in requesting the right product. Most often, this value is discussed in terms of how the product is functionally advantageous. This is common practice in industry. However, the product’s value as a public indicator of the host brand’s commitment to quality innovation should not be overlooked.

As a new ingredient brand becomes familiar among downstream specifiers, the name not only becomes more recognizable, but 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.

Strong host brands often hesitate to publicly identify an ingredient brand due to concerns about compromising their own brand’s perceptions. History has shown, however, that a powerful ingredient brand whose provider is committed to maintaining its perceptual equity long term continues to be enhanced by identifying investment in publicly recognized quality components. Smart host branders take full advantage of the popularity of a famous ingredient brand, further enhancing the equity of their original brand.

Challenges of Managing an Ingredient Brand

Many ingredient brands, such as Intel®, Kevlar®, Micro-Ban®, and Stainmaster®, have successfully passed the value-adding test of time. The key to achieving this marketplace status is to manage the ingredient brand well beyond its functional value. Accomplishing this is much more complex than managing a consumer brand. Ingredient branders face their own challenges that must be met in order to fully capitalize on an ingredient brand’s value potential.

Develop organizational understanding of the difference between the product and the brand to multiple constituencies, each with their own mindset and calculation of interest.

Effectively communicate the brand downstream from the direct customer, without creating unmanageable friction with that customer, who may perceive the ingredient brand building effort as inevitably reducing their profit margins.

Educate their own leadership on the value of creating and maintaining brand equity and the need to market the brand benefits that exist beyond its functional contribution to product features.

Educate the host brand’s leadership on value of brand equity and the need to market the brand benefits beyond the product features.

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, and implement it consistently overtime.

Coordinate all management functions to contribute to consistent brand message—to “walk the brand talk” in all decisions.

Assure that the internal organization, channel organizations, and customers always use the brand icon and extensions correctly. They must police misuse of the brand by others or risk commoditizing the brand and diminishing its financial value to that of a generic.

Capture and retain price premium, avoiding the temptation to trade off long-term premium for short-term share.

Gain and maintain organizational commitment to improving product performance that is consistent with what the brand means to members of its value chain and end users.

Brands have life cycles that operate somewhat differently than product life cycles. Both product and brand lives have “youth,” “maturity,” and “old age.” Unlike humans, product and brand lives can be rejuvenated and returned to their “youth”—usually renewed relevance accomplished by capitalizing on new end user trends. The classic example is Maytag, whose “dependability” positioning in the 1930s reassured homemakers that the new-fangled electric motor eliminating women’s hours at a washboard was going to last. By the 1970s, this was irrelevant, and Maytag lost consumers’ attention.

The arrival of the “lonely repairman” renewed the relevance of Maytag’s dependability to homemakers who now worked at jobs out of their homes full time and whose faulty washer might cost them a day of work. Maytag shows the opportunity careful management of a branded product’s life cycle offers.

Brand Management Life Cycles

The “marketing triangle” highlights managing the three critical dimensions of marketing a brand today: product, brand, and price. In the typical marketing triangle, the marketer develops and commercializes the breakthrough product and, after the product begins to achieve a high level of recognition, begins the process of branding the product. Instead, the marketer should recognize the brand potential of the breakthrough product and initiate brand management process immediately upon commercialization. An operating comparison of these two approaches is described below.

The Typical Brand Management Cycle

In the typical approach, the supplier develops and commercializes the breakthrough product and, after the product becomes famous, begins to transform the product into a brand.

The Successful Ingredient Brand Management Life Cycle

Convert the Typical Model to the Successful Model

Begin with brand management in mind. Apply a branding mindset at the onset of product commercialization, including naming, icon development, brand positioning, and communications. When doing the market validation concept research early in the product concept phase, design it to not just learn what end user respondents like or dislike about the concept, but also to capture how the respondents talk about the concept. This aspect of the data will inform your marketing team about how best to position it and help your brand communications team develop its most compelling messages.