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Ingredient marketing as a concept is so very widely used from street food to the aircrafts and complex IT solutions. I can’t think of any other practice that’s being utilized so extensively within the marketing discipline.
When a component of a product/service has its own identity or merit, you highlight the ingredient to enhance the value for the host product or service. The most popular example of ingredient marketing is “Intel inside”. The objective of this strategy is to seek improvement in the customer loyalty and commitment to return to purchase the host products containing the same ingredient in the future. It also helps the host product company to charge premium price because of the brand value of the ingredient.
Few examples of ingredient marketing are
1.Pani Puri/Gola with mineral water
2.Pav Bhaji with Amul Butter
3.Cycles with Shimano gears
4.Laptops with licensed version of OS and software.
5.Stents with the tested anti cancer drugs coated on them
6.Paints with Teflon
7.Sports wear with Gore Tex
8.Cakes with Ferrero rocher chocolates
9.Mango drinks with Hapus Mangoes
10.Cell Phones/Tabs with certain OS, processor, camera, glass, memory card, battery….etc.
11.Certain Engineering services with CADS RC
12.Certain SAAS written in certain languages with certain associated benefits…
The list can be endless..
When do we go for Ingredient Marketing?
When the perceived value of the ingredient is more than the host product or the ingredient is going to further add value to the host product. When a plumber tells us that he is going to use only Jaquar brand of accessories, the trust on him goes up. For a service industry, manpower, IT systems, the physical infrastructure…etc can be used as a part of ingredient marketing.
It is also possible that we create a brand for one of the components of our host product.Maruti Suzuki created an independent brand personality for their K series engines.In fact there were TVCs which talked about only the K series engines ( The sprinter ad)
A word of caution, when Pepsi tried with NutraSweet, it backfired since there were some negative reports on NutraSweet. When we are choosing the ingredient for its marketing, we need to be doubly sure of its performance. The ingredient has to ultimately deliver the promise made to the consumers.
When Intel was about to launch the campaign “intel inside”, initially there was lot of resistance from all the four big brands of computers those days. They wanted their computers to be bought by virtue of their strength rather the strength of micro processors. But, the small unorganized players in the business of assembly of computers were very happy because “intel inside” was giving certain legitimacy to their brand. They could claim certain parity with the established brands because of common ingredient..The unknown or less known brands would immensely benefit from the strength of the ingredient. In the initial stages of brand creation, they may piggy back on the ingredient, gain strength and create their own brand image. We saw this happening in cell phone market, initially, they focused on Android OS, Processor, camera etc..for creating brand awareness.
Sometime the brands create differentiation by highlighting something which is essential part of the product. For example Silver in the batteries and PUF in the refrigerators. But this may not give a sustained differentiation in the long run.
For a product that already enjoys a premium image and high customer expectations, it’s best to avoid ingredient branding and focus on growing the host brand (as it happened in case of Pepsi-NutraSweet, Godrej lost the PUF advantage)
Ingredient branding can have a significant strategic advantage for both the parent company and the ingredient brand company provided it is well thought out keeping the long term perspective in mind.