Ingredient Branding of Industrial Goods

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Ingredient Branding of Industrial Goods:
A case study of two distinct different automotive suppliers

Waldemar Pfoertsch[1] / Johannes Rid[2] / Christian Linder[3]

Abstract

This paper concerns ingredient branding; more specifically, ingredient branding for industrial goods. Although research in ingredient branding has been quite intensive in the area of fast moving consumer goods, considerably less research has been carried out for industrial goods. In this paper, the authors provide insight into whether successful ingredient branding can be transferred to industries where it has not been a common phenomenon: automotive suppliers.

Two major companies in the automotive industry are analyzed in this paper: Autoliv, a major player in car-safety supplies and equipment like seat belts and airbags, and Bosch, producers of a large variety of car components, like diesel and gasoline injection systems, braking components (e.g. ABS and ESP), and starting motors and alternators.

The findings include enormous potential for B2B companies in the field of ingredient branding. Car suppliers, for instance, have rarely used the option of branding their ingredients at the finished product. The authors give a historical perspective, show e.g. that ABS braking system, invented by German supplier Bosch would have been a perfect candidate for branding to the final customer. In the purchasing decision of potential car buyers, the ingredient ABS, provided by a strong ingredient manufacturer (e.g. Bosch) could have led to a preference of buying a specific car, and in the end, added to the supplier’s reputation and revenue.

1. Leveraging the brand

We now live in a world where consumers receive thousands of impressions and messages every day. Ever increasing competition makes it more difficult for a message to reach the audience and target group, with the consequence that it becomes harder for a consumer to differentiate between brands. Furthermore, as competitive advantages and innovations are copied at a higher speed, products and services become more alike. In this kind of environment, it is important for producers to find a position for their product or service in order to focus and clarify the attributes that make their product unique to the customer. In response to this current business environment, research and best practice show that more and more firms have come to the realization that one of their most valuable assets is the brand name associated with their products or services. (Keller,2003, Pfoertsch/Mueller, 2006). Producers understand that powerful brands are beneficial to the company: “Brands, therefore, are genuine assets and, like other forms of asset, they can appreciate considerably as a result of careful management and development.” (Blackett, in: Murphy, 1989). Kotler/Pfoetsch (2006) have proved that B2B branding offers strong competitive advantages, “by implementing a holistic brand approach companies can accelerate and increase their overall success” compared to companies that do not go the path of B2B branding. Brands should be seen in a holistic manner where all activities of a company should be integrated to get the maximum advantage (Kotler/Pfoertsch, 2006).

Strategic success might be achieved through leveraging the brand, because the brand is one of the most strategic and worthy assets a firm owns. Possibilities to leverage the brand include line extensions, stretching the brand vertically, brand extensions, and co-branding (Pfoertsch/Schmid, 2005). Co-branding means that two brands form an alliance in one or several areas that lead to a new product branded with both brands. Ingredient branding, on the other hand, is a brand that is solely used as a component of a branded article (Riezebos, 2003). According to Norris (1992), there are two relevant criterias that must be fulfilled for ingredient branding. First, the component can only be bought and consumed by consumers as a part of the branded...
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