Inbranding

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Think Big in Small Things
Challenges and Opportunities of Ingredient Branding
Waldemar Pfoertsch 2006

The brand in the brand “Ingredient Branding“

Jackson, Tim (1997)

Ingredient Branding examples
• Microban • Made of Makrolon • GoreTex • Dolby Stereo • Nirosta Pfoertsch/Mueller (2005)

1

Brand extension examples of ingredient branding
• Beechnut baby foods with Chiquita banana, • Ben and Jeny's Heath Bar Crunch ice cream, and Fat Free Cranberry Newtons with Ocean Spray cranberries • Kellogg’s Pop-Tarts with Smucker’s (Rao, Qu, and Ruekert 1999; Shocker, Srivastava, and Ruekert 1994)

Company owned Ingredient brands

David Aaker, 2003

The basic motivation for using ingredient branding
• Enhances the differentiation of the host brand from competition • Improve the competitiveness • Enhance the equity of host brand David Aaker, 2003 Desai/Keller (2002) McCarthy/Norris (1999)

2

Effects of branded ingredients

McCarthy/Norris (1999)

Change of competitiveness through branded ingredients

McCarthy/Norris (1999)

B2B Brands are reaching out to via OEM and distribution to the end user Active Passive support Whole

/Re-

User

Ingredient supplier

OEM
tail

Pfoertsch/Mueller (2005)

3

Ingredient Branding executes a multilevel marketing policy
IngredientSupplier
Selling Sourcing

Multi Level Marketing

First Level Marketing

Original Equipment Mfg
sourcing Selling

Second Level Marketing Third Level Marketing
Kleinaltenkamp (2001)

Distribution
Souring Selling

End user

Destinction between InBranding and Co-Branding
Branding Approach

singular
„branded“ product „co-branded“ product

Classic branded finished product

Intel

Not possible

Microban Makrolon

„self-branded“ ingredient

Tide & Downy VISA & Citibank

in cooperation

Intel & Dell NutraSweet & Coca Cola

Lycra & Woolmark

„co-branded“ ingredient

Ingredient Branding Ingredients Co-Branding

Final products
Baumgarth (2001)

Final products & Ingredients

Push und Pull beim InBranding
Sales-promoting from the Ingredient supplier to the final customer IngredientProducer Sales-promotion to the B2B Customer Supply-push Demand Supply

Pull
Demand pull Incentives for the demand creation of a certain ingredient in the final product Final Product Producer OEM Demand Supply

Incentives to demand creation at the B2B customer

Push
Supply-push
Incentives for demand creation at the final customer

Final User Kotler/Pfoertsch (2006)

4

Implementation steps for In Branding
Steps
1 2 3 4

Description

Raising of credit, Unknown Ingredient brand profits on the Exploitation of back of well-known brands reputation Break-through and market proof Repayment of credit, Synergy

Unknown Ingredient brand becomes known and famous Known Ingredient brand is helping ist supporter and other are benefiting from it Ingredient Brand is present anywhere and could not be used as a differentiator and is pushing former supporters into price wars

Fiesco1-Effect

1) Named after „The conspiracy of Fiesco “, 1783 written by Friedrich Schiller: „Der Mohr hat seine Schuldigkeit getan, der Mohr kann gehen“. „He paid his tribute, now

it is time for him to go". Bugdahl (1996)

1 Raising of credit, Exploitation of reputation

2 2 Break through 2

Start of the "Intel Inside" campaign. The unknown ingredient brand profits on the back of the PC manufacturers (OEMs) by co-operation advertisement

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)

4

Fiesco-Effect

3 3

Repayment of credit

Intel processors use the majority of all PC manufacturers, thus are no longer possible a differentiation. While Intel determines the market prices, the PC manufacturers must enter into a price war again.

The acceptance of Intel helps the co-operation partners (OEMs), to increase...
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