That Magic Ingredient!

Posted on 2018 08 172018 08 17

Introduction

Ever wondered, why do we pay more for a cooking pan with a Teflon sticker? Or why has McFlurry become so popular? In addition, how did Sunkist make its name?

Ingredient branding – creating a different identity

The answer is, we don’t really trust on the quality of the pan and material used. We need the assurance of technology used by the Teflon brand. If it wasn’t Oreo in McFlurry, the product wouldn’t have probably gained this leverage. Or, we wouldn’t wish to buy an orange without a quality claim of the Sunkist brand.

Take the example of Tetra Pak, a packaging material manufacturer. Why would a consumer want to buy milk in a Tetra Pak packaging when it drives up the price point even for a single transaction? Of course, for the benefits that that packaging offers, provided the customer know its various benefits.

Brands have leveraged on this very strategy and hence have managed to create an identity different from their host brands. A variant of this theme is called ‘ingredient branding’. As part of this strategy, it is positioning the brand of an ingredient on the product that increases its appeal.

Ingredient brands follow different rules

Ingredient brands follow different rules than consumer-facing brands.  Such brands are not necessary identifiable visually on an individual basis because they become a part of the common identity along with the other brand. In branding parlance, it is called visually complementing the other brands without any conflict.  Therefore, when a brand becomes an ingredient brand, it has the capability to command a higher price and be more profitable.

A similar and classic example of ingredient branding would be Intel with its “Intel Inside”campaign launched in the early nineties.During this campaign, they taught consumers to look for the Intel Inside® logo as an assurance of quality.

Many consumers seeking quality in computer products eventually came to see “Intel Inside” as a standard inclusion, after which they began asking this question: “Why doesn’t your product use Intel processors?” Because of this increased awareness, hundreds of computer companies today license the use of the Intel Inside® logos.

We’ve also seen automakers jump on the ingredient branding band wagon too. Looking to cash in on the iconic fervour, Bajaj Motorcycles in 2016, launched its new bike Bajaj V, forged from the invincible metal of the 1971 Indo-Pak war hero INS Vikrant. The campaign was a big hit and today, people remember Bajaj’s comeback with rebirth of INS Vikrant.

When ingredient branding comes into the picture

Now, let us understand when ingredient branding comes into the picture with the help of a few examples:

• When the ingredient is central to product performance – Intel
• When the ingredient is a differentiator from the competition – Dolby, Beer Shampoo
• When end products are not well-branded – Lycra, Priyagold (Amul butter)
• When the ingredient helps in assuring quality – Tetra Pak/Teflon
• When multiple ingredients that may even be sold separately in the aftermarket come together to form a unique product, establishing loyalties for them – Oreo

Wrapping up

Apparently, the world of brands is changing and many brands are losing value because of shifts in consumer taste.  Currently, branding is becoming even more interesting because the battle between brands which rely on their USP and those which utilize the concept of ingredient branding is becoming more and more intense.

Nevertheless, for those brands which rely on ingredient branding, the ever changing technology is rendering these brands vulnerable. This is because such brands also depend upon factors such as brand loyalty, product loyalty and recall factor. Let’s continue to keep an eye on the branding world to see whether ingredient branding turns into a successful strategy in the future.