In
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
, ingredient branding or ingredient marketing refers to a process in which a company markets an established ingredient or component used in its own products. The overall marketing strategy seeks to signal a high-quality product based on the perception of the ingredient.
From the ingredient company's perspective, they are not required "to convince consumers that their product is valuable, their customers do it for them".
History
Chipmaker
Intel
Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 seri ...
's 1991 "Intel Inside" marketing campaign was the first landmark ingredient branding success. It came about in the late 1980s when the abruptly rising interest in personal computers led to a huge demand for
central processing unit
A central processing unit (CPU), also called a central processor, main processor or just processor, is the electronic circuitry that executes instructions comprising a computer program. The CPU performs basic arithmetic, logic, controlling, an ...
s, (CPUs) which Intel took as an imperative to "explain the desirability of its products" to end users, not just the
original equipment manufacturer
An original equipment manufacturer (OEM) is generally perceived as a company that produces non-aftermarket parts and equipment that may be marketed by another manufacturer. It is a common industry term recognized and used by many professional or ...
(OEM). In addition to Intel's advertising for "Intel Inside", it subsidized OEMs that had agreed to include the Intel Inside logo on their products and ads.
Other examples of ingredient branding include:
* ''
NutraSweet
The NutraSweet Company is an American nutrient company that produces and markets NutraSweet Neotame, their trademarked brand name for the high-intensity sweetener neotame.
In 2021, NutraSweet was placed 43rd by FoodTalks' list of Top 50 Global S ...
'' and ''
Canderel
Canderel is a brand of artificial sweetener made mainly from aspartame. Canderel is marketed by The Merisant Company, a global corporation with headquarters in Chicago, Illinois, also Switzerland, MexicoUnited Kingdom and Australia.
Canderel ...
'', a brand name for the
artificial sweetener
A sugar substitute is a food additive that provides a sweetness like that of sugar while containing significantly less food energy than sugar-based sweeteners, making it a zero-calorie () or low-calorie sweetener. Artificial sweeteners may be d ...
Aspartame
Aspartame is an artificial non-saccharide sweetener 200 times sweeter than sucrose and is commonly used as a sugar substitute in foods and beverages. It is a methyl ester of the aspartic acid/phenylalanine dipeptide with the trade names ...
in the food industry (
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
lite)
* ''Teflon'' as a coating for pots and pans and ''
Gore-Tex
Gore-Tex is a waterproof, breathable fabric membrane and registered trademark of W. L. Gore & Associates. Invented in 1969, Gore-Tex can repel liquid water while allowing water vapor to pass through and is designed to be a lightweight, waterpr ...
'' for sportswear (both products are brand names for
polytetrafluoroethylene
Polytetrafluoroethylene (PTFE) is a synthetic fluoropolymer of tetrafluoroethylene that has numerous applications. It is one of the best-known and widely applied PFAS. The commonly known brand name of PTFE-based composition is Teflon by Chemour ...
)
*''
Makrolon
Polycarbonates (PC) are a group of thermoplastic polymers containing carbonate groups in their chemical structures. Polycarbonates used in engineering are strong, tough materials, and some grades are optically transparent. They are easily work ...
'', a plastic produced by
Bayer MaterialScience
Covestro AG is a German company which produces a variety of polyurethane and polycarbonate based raw materials. Products include isocyanates and polyols for cellular foams, thermoplastic polyurethane and polycarbonate pellets, as well as polyuret ...
*''
Bitrex'', a bitter substance discovered by
MacFarlan Smith
MacFarlan Smith is a pharmaceutical research company based in Edinburgh, Scotland, founded in 1815. It is part of the Fine Chemical and Catalysts division of Johnson Matthey.
Background
J.F. Macfarlan
J.F. Macfarlan Ltd was founded in 1780 as a ...
Ltd.
* ''ClickTight'' as a car seat installation method by
Britax
Britax () is a British manufacturer of childcare products including car seats, pushchairs and high chairs.
History
The company began making automotive safety equipment and accessories in 1938, as well as importing car and motorcycle accessorie ...
* Microban for anti-microbial technology or additives
*
Dolby
Dolby Laboratories, Inc. (often shortened to Dolby Labs and known simply as Dolby) is an American company specializing in audio noise reduction, audio encoding/compression, spatial audio, and HDR imaging. Dolby licenses its technologies to ...
's
Dolby Digital
Dolby Digital, originally synonymous with Dolby AC-3, is the name for what has now become a family of audio compression technologies developed by Dolby Laboratories. Formerly named Dolby Stereo Digital until 1995, the audio compression is lossy ...
mark on cassette tape players
Marketing
Ingredient branding cannot be allocated to either
industrial
Industrial may refer to:
Industry
* Industrial archaeology, the study of the history of the industry
* Industrial engineering, engineering dealing with the optimization of complex industrial processes or systems
* Industrial city, a city dominate ...
or consumer goods marketing. The consumer is the
end-user
In product development, an end user (sometimes end-user) is a person who ultimately uses or is intended to ultimately use a product. The end user stands in contrast to users who support or maintain the product, such as sysops, system administrat ...
of the ingredient, but is not part of the
buying decision
The buying decision process is the decision-making process used by consumers regarding the market transactions before, during, and after the purchase of a good or service. It can be seen as a particular form of a cost–benefit analysis in the ...
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 affect the consumer, meaning a positive influence on his or her buying decision.
Ingredient brands "complement other brands without conflict. They go inside and aren’t necessarily identifiable visually. Their quality message carries over to the brand they’re inside of."
Cooperative advertising
Cooperative advertising can be used to incentivize the end-product manufacturer to advertise the ingredient, of which the "Intel Inside" campaign was a big example. In fact, by the end of 1992, over 500 OEMs had signed onto Intel's cooperative marketing program and 70% of OEM ads that could carry the "Intel Inside" logo did so.
Outside of that example, however, there are a 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
Co-branding is a marketing strategy that involves strategic alliance of multiple brand names jointly used on a single product or service.
Co-branding is an arrangement that associates a single product or service with more than one brand name, ...
References
{{reflist
* Kotler, 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
Brand management
Types of branding