ingredient branding
TRANSCRIPT
The Inside onIngredient Branding
Waldemar Pfoertsch 2006
Agenda
• Defining Ingredient Branding
• Understanding Ingredient Branding
• Implementing and Managing
• New Application and Future Research
• Brand Management at CEIBS
The most famous example of the “Brand in the Brand”
Jackson, Tim (1997)
Using the concept of Ingredient Branding or short: “InBranding”
Other Ingredient Branding Examples
• Microban
• Makrolon
• GoreTex
• Dolby Stereo
• Nirosta
Pfoertsch/Mueller (2005)
Brand Extension Examples of Ingredient Branding
• Beechnut baby foods with Chiquita banana
• Ben and Jerry's Heath Bar Crunch ice cream, and Fat Free Cranberry Newtons with Ocean Spray cranberries
• Kellogg’s Pop-Tarts with Smucker’s jam
(Rao, Qu, and Ruekert 1999; Shocker, Srivastava, and Ruekert 1994)
Company Owned IngredientBrands
David Aaker, 2003
Basic Motivation for Using Ingredient Branding
• Enhances the differentiation of the host brand from competition
• Improves competitiveness
• Enhances equity of host brand and “self-brand”.
Desai/Keller (2002)David Aaker, 2003 McCarthy/Norris (1999)
Effects of Branded Ingredients
Norris/McCarthy (1999)
Change of Competitiveness through Branded Ingredients
Norris/McCarthy (1999)
Ingredient Branding Executes a Multilevel Marketing Policy
ThirdLevel Marketing
Multi Level Marketing
Ingredient-Supplier
First LevelMarketing
Selling
Original Equipment Mfg
Sourcing
End user
SellingSouring
Second Level Marketing
Distribution
sourcingSelling
Baumgarth (2001)
Push und Pull by InBranding
Ingredient-Producer
Final ProductProducer OEM
Final User
Sales-promotion to theB2B Customer
SupplySupply-push
Incentives todemand creation
at the B2B customer
Supply-pushIncentives for
demand creationat the final customer
Supply
Push
Sales-promoting from theIngredient supplier to the
final customer
Demand pull
Incentives for the demand creation of a certain ingredient in
the final product
Demand
Demand
Pull
Kotler/Pfoertsch (2006)
Distinction between InBranding and CoBranding
Finalproducts
Final products & Ingredients
Ingredients
singular
in cooperation
Classic brandedfinished product
Notpossible
CoBranding
Ingredient Branding
Intel
Microban
Makrolon
Lycra&
Woolmark
BrandingApproach
self brandedingredient
cobrandedingredient
cobrandedproduct
brandedproduct
Baumgarth (2001)
Tide & Downy
VISA & Citibank
Intel & DellNutraSweet& Coca ColaMakrolon &
Uvex
Implementation Steps for InBranding
Ingredient brand is present anywhere and could not be used as a differentiator and is pushing former supporters into price wars
Fiesco1-Effect4
Known ingredient brand is helping istsupporter and other are benefiting from it
Repayment of credit, synergy3
Unknown ingredient brand becomes known and famous
Break-through and market proof
2
Unknown ingredient brand profits on the back of well-known brands
Raising of credit, exploitation of reputation
1
DescriptionSteps
1) Named after „The conspiracy of Fiesco “, 1783 written by Friedrich Schiller: „Er hat seine Schuldigkeit getan, er kann gehen“. „He paid his tribute, now it is time for him to go". Bugdahl (1996)
Raising of credit, exploitation of reputation
Start of the "Intel Inside" campaign. The unknowningredient brand profits on the back of the PC manufacturers (OEMs) by co-operation advertisement
1
Fiesco-Effect
Intel processors are used by majority of all PC manufacturers, thus a differentiation is no longerpossible. While Intel determines the market prices, the PC manufacturers mustenter into a price war again.
Repayment of credit
The acceptance of Intel helps the co-operationpartners (OEMs) win morecustomes.
3
2Break through
The acceptance of Intel rises one year after start of the "Intel Inside" campaign of 60% to over 80%, it develops a demand pull (Pull Through effect)
22
34
Kleinaltenkamp (2001)
Situation of Component Supplier for InBranding
Increase of dependency against quality problems from the OEMs
Higher cost and time
Increase need for quality assurance
Visible target for competitive attacks
Negative Image of OEM brands
Resistance of industrial customers
Become known by the publicCreate chances for competitive differentiationEstablish entry barrier for competitorsIncrease of customer loyalty and demand pullEstablish means against replaceabilityPositive image of OEM brands Price-/Volume premiumPull-creationCreation of Brand EquityIncrease of market power versus OEMs
RisksOpportunities
Risks and Opportunities for Suppliers and OEM
Supplier
Increased demandBetter pricesChances for growthLesser risk for substitutionCreation of entry barriers
Potential conflicts with OEMHigher financial burden on enduser communicationHigher risk of image damages through product failure
OEM
Positive Image creationDifferentiationLess marketing costIncreased product value
Image risksWeakening of own productsIncrease of branding around or in the core product
Ris
ks
.
Possiblewin-winstrategy
Increasedrisk andconflictpotential
Opp
ortu
nitie
s
Application Conditions of InBranding
High
Low
Schiesser & ArielDeutsche
Bahn AG&
Citibank
Complexity of components in relation to final product
High Low
Example:Micro processors (Intel)ABS, ESP (Bosch)Textile coding (Teflon)Laminate (GoreTex)Bicycle gears (Shimano)
Unsuitable for Ingredient Branding
Suitable for Ingredient Branding
Important forfunctionality of finalproduct
Pfoertsch/Mueller (2005)
More Insids on Conditions of InBranding
High
Low
Schiesser & ArielDeutsche
Bahn AG&
Citibank
Number of OEMs
Number of supplierHigh Low
Example:Micro processors (Intel)ABS, ESP (Bosch)Textile coding (Teflon)Laminate (GoreTex)Bicycle gears (Shimano)
Unsuitable for Ingredient Branding
Suitable for Ingredient Branding
Pfoertsch/Mueller (2005)
Success Stories of InBrands
Intel InsideFirma: Intel CorporationBranche: HalbleiterindustrieProdukte: MikroprozessorenUmsatz: 38,82 Mrd. US $(2005)
NutraSweetFirma: NutraSweet CompanyBranche: LebensmittelindustrieProdukte: SüßstoffeUmsatz: 0,25 Mrd. US $ (2002)
Gore-TexFirma: W.L. Gore & AssociatesBranche: BekleidungsindustrieProdukte: TextillaminateUmsatz: 1,35 Mrd. US $ (2003)LycraFirma: INVISTABranche: TextilindustrieProdukte: ElastikfasernUmsatz: 6,9 Mrd. US $ (2003)
TeflonFirma: DuPontBranche: ChemieindustrieProdukte: AntihaftbeschichtungUmsatz: 26,99 Mrd. US $ (2003)ShimanoFirma: ShimanoBranche: SportartikelindustrieProdukte: FahrradkomponentenUmsatz: 1,6 Mrd. US $ (2004)Tetra PakFirma: Tetra PakBranche: VerpackungsindustrieProdukte: VerpackungssystemeUmsatz: 7,3 Mrd. US $ (2003)
MakrolonFirma: Bayer MaterialScienceBranche: chemische IndustrieProdukte: Kunststoffe Umsatz: 10,7 Mrd. € (2005)
New Applications are on the Horizon
Z-Trim all-natural fat replacement products
soy protein
Open Research Questions
• Better understand how competitive advantage can be achieved through the use of ingredient branding .
• Establish brand metrics for multi-level branding.
• Track and predict ingredient branding success.
= Guild brands= Service brands = OEM brands (industrial)
= OEM brands (consumer) = Retail brands (consumer) = Ingredient brands
time
Importanceof
branding
Increase of importanceof new brandingconcepts
IndustrialRevolution
Relative decrease in importance of consumer brands
1300 1850 1900 1950 1970 1990 2000 2050
Future of Ingredient Branding
Havenstein (2004):
The Future of Brand Management at CEIBS
• Offer a series of dedicated Brand Management Courses and Seminar
• Initiate and Supervise Research Work
• Establish a Center for Business Brand Management (CBBM) at CEIBS and
• Organize the first Business Brand Management Conference in 2008
Literature• David Aaker, The Power of the Branded Differentiator, MIT Sloan Management Review
45 no1 83-7 Fall 2003• Baumgarth, C Freter, H.;. (2001): Ingredient Branding . Begriff und theoretische
Begründung, in Esch, F.-R. (Hrsg.): Moderne Markenführung, 3. Auflage, Wiesbaden 2001, S. 317 - 343.
• Bugdahl, Volker (1996): Ingredient Branding – eine Markenstrategie für mehrere Nutznießer, in: Markenartikel, Nr. 3/1996, S. 110-113
• Havenstein, Moritz (2004): Ingredient Branding. Die Wirkung der Markierung von Produktbestandteilen bei konsumtiven Gebrauchsgütern. Gabler Edition Wissenschaft, Wiesbaden
• Kalpesh Kaushik Desai & Kevin Lane Keller (2002), The Effects of Ingredient Branding Strategies on Host Brand Extendibility, Journal of Marketing Vol. 66 (January 2002), 73-93
• Kleinaltenkamp, Michael (2001): Ingredient Branding: Markenpolitik im Business-to-Business-Geschäft, in: Köhler, R./Majer, W./Wiezorek, H. (Hrsg.): Erfolgsfaktor Marke, München 2001, S. 261 . 270.
• Kotler, Philip and Pfoertsch, Waldemar (2006) B2B Brand Management Springer 2006• Levin, A.J., Davis, C. and Levin, I. (1996), ``Theoretical and empirical linkages between
consumers' responses to different branding strategies'', Advances in Consumer Research, Vol. 23, pp. 296-300.
• McCarthy Michael S., Norris Donald G. (1999) Improving competitive position using branded ingredients, JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 4 1999, pp. 267-285
• Narasimhan, C. (1999), ``The new appeal of private brands'', Harvard Business Review, May/June, p. 41.
• Norris, Donald G. (1992), "Ingredient Branding: A Strategy Option with Multiple Beneficiaries," Journal of Consumer Marketing, 9(3), 19-31.
Literature• Osselaer van, Stijn M.J. (2004) Of Rats and Brands: A Learning-and-Memory
Perspective on Consumer Decisions, Journal of Economic M:Business Administration and Business Economics, Oct 2004
• Jackson, Tim (1997): Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company. New York: Dutton (Penguin Books), 1997
• JANISZEWSKI, CHRIS and OSSELAER VAN Stiin M.J. ' (2000), A Connectionist Model of Brand-Quality Associations, Vol. XXXVll (August 2000). JOURNAL OF MARKETING RESEARCH. AUGUST 2000
• Pfoertsch, Waldemar and Mueller Intrajanto (2005) Marke in der Marke Ingredient branding, Springer 2005
• Rao, Akshay R., Lu Ciu, and Robert W. Ruekert (1999), "Signalling Unobservable Product Quality through a Brand Ally," Journal of Marketing Research, 37 (May), 258-68.
• Shocker, Allan D., Rajendra K. Srivastava, and Robert W. Ruekert (1994), "Challenges and Opportunities Facing Brand Management: An Introduction to the Special Issue." Journal of Marketing Research, 31 (May), 149-58.
• Simonin, B.L. and Ruth, J.A. (1998), ``Is a company known by the company it keeps? Assessing the spill-over effects of brand alliances on consumer brand attitudes'', Journal of Marketing Research, Vol. 35, February, pp. 30-42.
• Spethmann, B. and Benezra, K. (1994), ``Co-brand or be damned'', Brandweek, Vol. 35, No. 45, pp. 20-5.
• Vaidyanathan, R., Aggarwal, R. and Brown, M.G. (1999), ``Intel inside, generic outside: implications of ingredient branding for national and private label brands'', working paper, University of Minnesota-Duluth.
• Vaidyanathan, Rajiv Aggarwal, Praveen (2000) Strategic brand alliances: implications of ingredient branding for national and private label brands, JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000, pp. 214-228
谢谢!
Prof. Dr. Waldemar A. PfoertschInternational BusinessPforzheim University+49-171-536 8998+1-224-388 [email protected]