Ingredient branding, in which key attributes of one brand are incorporated into another brand as ingredients, is becoming increasingly popular among marketers (Wright 1975, Keller and Aaker 1990, Simonin and Ruth 1998, Keller 1998 as in Desai & Keller, 2002).
In ingredient branding there is no need for companies to jointly research or develop a new product, nor is there a need to heavily invest in efforts to bring the organizations together when entering new
markets (Blackett and Boad 1999). Ingredient branding is more closely related to the brand than the actual product that is incorporated and hence, not just any supplier from a particular product category will do. Another important characteristic of ingredient branding is that both partners rely on each other to get an awareness boast in order to attract more consumers, by promoting the brands together.
When a company wishes to gain a competitive advantage there are multiple ways to proceed. Ingredient branding does not include the introduction of a new product. Instead, companies add an ingredient to an existing product and the ingredient brand lends their reputation and their value in order to increase the value of a host brand (Vaidyanathan & Aggarwal 2000).
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Ingredient branding should modify the host brand to the better as a result of the value that the ingredient brand adds to the host brand. The host brand, therefore, increases their own brand equity by sending signals to the costumes that they are combining the quality of two products instead of one. The result of ingredient branding is dependent on the importance of the ingredient brand and the consumers’ associations to it (Desai & Keller 2002).
It is therefore important to notice that ingredient branding will not automatically imply success. By using ingredient branding, two brands can present a better composite attribute profile for the consumer by combining and using two complementary brands (Park, Jun & Shocker 1996 as in Desai & Keller 2002).
Hence, the result of ingredient branding is depending on the consumers associations to both brands (Vaidyanathan & Aggarwal 2000). It is therefore of great importance that the companies that use ingredient branding clearly make sure that the consumer understands the benefits that the ingredient brand is supposed to contribute to the host brand.