John, I agree that ingredient branding is important and is becoming more common.

It even happens with mega-brands becoming ingredients within other brands. Your example of Nippon Airways and the Dreamliner is a good one. Another example is AT&T and Cisco. (Full disclosure: Cisco is a Crimson client). I’d argue Cisco is a bigger business brand than AT&T and yet, Cisco offers a “Cisco Powered Network” Quality of Service certification for qualified service providers. AT&T has qualified for this ingredient branding which enables AT&T to brag about the quality of its managed service offered to businesses.

This is a win for AT&T because the Cisco brand carries such significant weight with business (and technical) decision-makers. AT&T can more effectively gain mindshare via a quality certification, and differentiate their offering from other service providers. This is also a win for Cisco because it creates a closer partnership between the two companies, and it extends Cisco’s brand to the business buyer. This brand extension helps Cisco position products more effectively to (non service provider) businesses as well.

I also argue that Cisco is much better at marketing to businesses than AT&T. Not only do they have a stronger brand, but they know how to leverage that brand. The key to ingredient branding is that both parties win, and Cisco has created a mechanism to enable a win-win with AT&T, and a variety of service providers. The smarter company drives the branding, whether it's as an ingredient or not.

I'm not sure why the final product has to be "not well branded"?? For example, IBM an Intel could be a perfect combination??

Great topic and an interesting article, though I feel that Prof Quelch missed the mark a bit on his concluding point with the Dreamliner. The airlines have had "brands" for quite some time; the DC-10, I would submit, is indeed a "brand" that is very recognizable by the frequent flyer crowd, and many of us today will select our travel based on the type of equipment offered. The newness of the Dreamliner is that Boeing has chosen to give it a name. While this is different, and indeed may be a successful differentiator in the market, it is not what I would call "ingredient" branding. The conclusion I was expecting, as I read the article, was that Boeing would emphasize its more comfortable interior environment by promoting a more comfortable ride "Cooled by Carrier", as an example that might work in North America, though maybe not on a global scale. Something of that nature would more accurately fit the Ingredient brand theme, at least as I see the issue.

None-the-less, a very thought provoking article.

After reading Mr. Gow's comments, I see better where the ingredient aspect was intended (i.e., that Nippon and others can utilize the "ingredient" branding). Upon an additional read of the article, I do see better that this is what Prof Quelch was aiming for in his point. As I noted, I was already "looking" for the impact in the 787 itself, not for the airlines, thus I missed the intended point. My apologies for my confusion....though I'd still like to see my idea of a "Cooled by Carrier" as I board one of my future flights!

To find more examples of ingredient brands we only have to keep the eyes open. The successful ones like Makrolon for Polycarbonates or Brembo for break systems are always spring in mind first. These examples are really clear and we can find form those examples a never ending list . But there are a lot more in the marketplace.

If we choose our fitness centre we look at the services they are offering there. Tea Bo for instance (a fighting sport for fitness) is a brand name of Billy Blanks and the IFFA. The IFAA gives the license the fitness centres. With the right to offer this special “ingredient” the fitness company gets the right to put the brand on their advertisings. We choose the fitness centre because we trust this special fitness program to bring us faster in shape then the others. What about your MBA program? Companies usually pay a higher salary if the job seeker shows his “Harvard MBA Inside” on his application. Is this also an ingredient brand?

The question for more examples is easy to answer. We find ingredient brands in the traditional areas like components (Intel), row material (Woolmark) and so on. Even services are used as ingredient brands. That an ingredient branding strategy can lead to a positive effect seems to be clear and often proofed in practical business cases. But what’s determines the brand value, how to manage this strategy and what’s the conditions for a successful ingredient brand are questions which should be answered by marketing scientists. What do you think???

Dear All,

branding and promoting ingredients is quite a common thing.
probably a big example is generic medicines. hardly anybody knows the makers and/or brands. they all look at active ingredients.
Ssanyong Cars from Korea could only sell and promote itself based on the Mercedes Benz enigine inside. Probably almost same with Seat (and Skoda), when it started (Volkswagen enigine and technology inside).
more indirectly but same pschychological principal: health products from various brands that promote ingriedients like glucosamine.
kind regards

Ingredient branding, in a sense, is the parallel of "M&A" in the business world. What is the easiest way to be good at something-buy it! If your brand is lacking in delivering certain qualities,just add a brand name as a partner and you have instantly lessened the time of building that feature within your product. That being said, a gateway to drawbacks can be concluded. If you have a product line, can the rest of your products survive unless branded with your newly acquired partner? Can you ever be known by your own brand name?

The other aspect of this type of branding is an actual raw material that portrays benefits and characteristics that are easier to sell and already carry value. I do market research for several automtive aftermarket companies. The trend in this market is lighter is better. Carbon fiber and titanium are ingredients that are buzzing in everyones ears. A products marketed benefits are easier understood and trusted when well-known materials of proven value are harnessed within the products attributes.

Ingredient branding is becoming increasingly popular in the automotive industry, especially with parts but less so with materials. In the case of high-end speakers (Bose, Harman/Kardon, etc.), the automotive supplier’s name is prominently displayed within the vehicle and sometimes mentioned in a TV commercial if that will increase car sales. For some car buyers, their decision may be influenced by a particular brand of tire (Goodyear, Michelin, etc.) or tail lights (Altezza).

What about materials such as aluminum, plastic, or coatings? How can Tier 2 suppliers brand their material to create pull from the consumer? Will car buyers demand their seats be made out of a particular visco-elastic foam such as Tempur-Pedic? Ingredient branding will surely increase in the automotive industry as suppliers continue to differentiate their part or material.

And let us not forget the most important reason for an ingredient brand: it creates increased perceived value of the "carrier" brand allowing it to command a premium price and in many cases increased margin for the distribution channels. Like all marketing, it about ROI and an investment in an ingredient brand can pay off in "chips."

Reply to comments about IBM and Intel by Chole Li

This comment is a GREAT EXAMPLE of how people and public sees a brand - this case "IBM" and "Intel" seems the reader knows little or has a 'general Public's" perception of those TWO BRANDS.
fact - the only things in common = TWO GREAT tech companies.
fact - IBM is no longer a PC HARWARE manufacturer , its more a SERVICE COMPANY NOW.....
etc etc ,,,,
So Brand discussion , yet again continues

thanks > Merry Christmass to my fellow HBR's

Ingredient branding needs hybrid branding to market well to direct-to-consumers and B2B firms. The so called “ingredients’ can also take several 'forms' when used as differentiators to drive competitive advantage. These can be well-researched products, co-branded products, new concepts or even company’s innovation agendas as subtle ingredients that may used for successfully connecting with publics.

A few examples in addition to those already mentioned:

Corowise with Omega-3's from Cargill
Frito-Lay chips with Masterpiece BBQ Sauce
Crest toothpaste containing Scope mouthwash
Tide containing Downey fabric softener
Vanaspati Ghee – used by Restaurants in India as a measure of standard preparation
Microsoft – Vista in computers, and host of other OEM combinations
Rolls Royce engines in planes
DLP Texas Instruments technology used by TV makers for a clear picture
Anderson Windows by home sellers
BOSE systems in cars
Barnes & Noble and Borders teaming with Starbucks and Godiva (JVs)
Energy firms (BP) rebranding on green efforts(Agenda)

Hybrid branding insulates companies of high commercial risk, provides the common purpose of the companies that make these ingredients/products, and captures a decent share of channel margins and build loyalty to protect against lower-priced competition.

I think Ingredient branding has come a long way and few of the best brands will be Ingredient brands in the future.
As I have observed that the fastest growing companies are Ingredient supply companies all over the world, because their business grows with the growth in the principles business and In most of the cases these companies supply to lots of competing brands in the market.

This is a good case for discussion in Business Marketing.
Stimulating the demand at the consumer end, there by creating a Pull in the system is known as telescopic marketing.

We have the cases of INTEL INSIDE and DUPONT stretch yarn etc doing this in Computers and textile industries.

What is that the " DREAMLINER" separates from the above?

When we separate ' PERFORMANCE QUALITY' and 'consumer perception of quality' we will notice that the INTEL or DUPONt addressed performance quality.

In an air travel experience, Safe landings and take-off, no malfunctioning of aircraft is something taht could be associated with performance quality.

Inflight experience is largely Consumer perceprion of Quality.
As Prof John Quelch puts it:
" You look for a sticker on your Orange purchase since you cannot inspect what is inside. You pick the orange with a sticker since you trust this brand"

Extending the same logic, Customer's choice set will be those airlines flying 787 with Dreamliner branding as a threshold minimum. Over and above this, they will have further expectations which they would try to truncate it down form among the choice set.

This is really very interesting.

Prof Sukesh Kumar IBS Bangalore

Dear All

The customer perception quality and the cometitive cost
affordabilty to mark economy in scale are very importent
aspects in our research to offer the humanity at large.
Be it service or product reaching the market for profits
and large sales is not really serviing the publics.
That dedicated sevice of quality,cost to embrace large
population.

Govind Rao Adapa
Management Consultant
adapagr@yahoo.com

That's a good idea !

The concept seam obvious for the final product. The brand awardness and recognition will be enhanced for them.

But what in it for the well know ingredient brand, how they control their brand image ? What is the gain for them ?

John, I'm from Brazil... what do you think about country's brands , regarding increase value to classical comodities ?
thanks
Tejon