Ingredient branding

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

Well-known examples include PC computers with Intel Inside, diet soft drinks with NutraSweet, stereos with Dolby noise reduction, and Chevron gasoline with Techron.

Ingredient branding has become a prevalent marketing strategy in the 1990s, with clothing, computers, shampoo, breath mints, over-the-counter medicines, soft drinks, cookies, gasoline and credit cards all emphasizing branded ingredients.

Some big-name ingredient brands, such as Intel and Teflon in cookware, have become the point-of-entry to their categories. Other high profile ingredient brands, such as Gore-Tex in outerwear and ski apparel, are not category requirements but greatly influence consumer preference and choice.

IS THE INGREDIENT PART OF A RECIPE FOR SUCCESS, OR DISASTER?

Ingredient branding is a sensible approach when the ingredient enjoys more perceived value than its host product. In general, if the host product is new or has low awareness, if its technology is complicated, or if the ingredient brand can provide the product with a legitimate quality advantage over its competition, then the ingredient branding strategy can be highly effective.

Conversely, for a product that already enjoys a premium image and high customer expectations, it's best to avoid ingredient branding and focus on growing the product brand.

There remain, however, considerable advantages to employing an ingredient branding strategy. Ingredient branding can enhance the image, perceived quality and credibility of the host product, especially if the ingredient is well known by consumers.

Ingredient branding can provide immediate brand recognition and a "ready-made" audience for a new product, and it can boost differentiation by giving the host product a distinct characteristic that is difficult for competitors to imitate. And when an ingredient or component is the point-of-entry to your product category, ingredient branding becomes the only viable course of action.

Beyond the marketing benefits, ingredient branding can help companies achieve significant efficiencies because often the supplier and the manufacturer will share production, promotion, advertising and R&D costs. In addition, a well-known ingredient brand can make highly competitive distribution channels more accessible.

Despite its benefits, ingredient branding poses risks for certain products. For example, 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.