September 15, 2001

Corporate Identity & Ingredient Branding

A White Paper prepared by The Marketing Depot

Establishing a Powerful Brand

"A Company's brand can be its most powerful weapon." -Ernst & Young

According to Brandweek, if Coca-Cola were to close its doors and liquidate its business, the brand itself—the identity system that makes Coke immediately identifiable—would be worth more than $26 billion.

At first blush, this seems absurd. Then ask yourself how often you ask for a "Coke" rather than a "cola"—then factor that over the 3-billion+ people worldwide that buy soft drinks. The same logic applies to your business, only on a somewhat smaller scale.

Granted, Coke is a marketing giant that has spent more than a century building a strong, recognizable identity. But the point remains valid. As a you focus more on this key asset, more than any other tool you have at your disposal, effective corporate and product branding will differentiate you in your markets and create additional value in your offerings. In short, the right positioning and branding will:

• Increase recognition—and demand
• Allow you to increase your price—and your margins
• Improve the perceived value of your products

Your corporate image and product brands, therefore, are assets that should be carefully crafted and managed.

With that, we respectfully submit the following question:

Step one—does your current branding work?

We believe the question must be thoughtfully answered. We are in no way suggesting or implying that it does not work. Rather, we believe this rudimentary question must always be asked.

Can your corporate and product positioning and branding be thoughtfully and strategically enhanced in order to better serve your needs and—ultimately—create improved business performance and shareholder value?

Any brand must meet the following criteria:

• It must support better name awareness and recall
• It must enhance perceived quality
• It must support your product brand associations
• It must differentiate you among your competitors
• It must reinforce your desired market positioning
• It must foster brand loyalty
• It must be available and able to be legally protected

While we have no recommendations at this point (any firm recommendations must be based upon careful analysis), we do have a basis for beginning research and discussions around this issue. These next steps are outlined in the last section of this document.

Ingredient Branding

"If I buy a new cell phone, am I buying AirTouch cellular service or the Motorola StarTac phone? When I buy a new PC, do I care most about whether it's a Compaq, Dell, HP, Sony or IBM product—or am I more concerned that it contains an Intel microprocessor instead of AMD or Cyrix?" - Brandweek

One of the new branding paradigms that has evolved in the last decade is the concept of "Ingredient Branding." The term is best described with examples and the two foremost are Intel and Nutrasweet. This also applies to the relationship between a manufacturer and its brands.

The basic idea is that some final consumer (which includes business-to-business environments) products contain parts that are made by other manufacturers—and that these parts have a separate value above and beyond the larger item being purchased or considered for purchase. These ingredients make the final item a more appealing purchase—a better value.

Furthermore, the creation of an ingredient brand for has a synergistic effect with manufacturers you may eventually partner with. One of the more brilliant aspects of the Intel ingredient branding effort was the way Intel used the strength of its ingredient brand to protect price by underwriting advertising in lieu of product discounts. Here’s an excerpt from the September 20, 1999 issue of Brandweek:

If, as a computer manufacturer, you ordered enough Intel chips and put the "Intel Inside" logo on your ad, Intel would underwrite a significant portion of the media expense. This was, in effect, a disguised discount on the chips. The chip price stayed the same, keeping revenues and stock prices high, whereas a volume discount was applied to advertising.

As a result, computer manufacturers began co-branding their computers with the Intel name, the logo got even wider recognition, and consumers began to perceive it as a benefit in performance and reliability of their purchase.

Advertising would stimulate demand for each of Intel's customers, and of course, Intel also benefited. Once the computer makers got hooked on the millions of dollars of advertising, like junkies, it was hard to kick the habit. Compaq tried, claiming Intel's brand diluted its brand, but eventually came back. It was just too good of a deal.

The impact of the program continues to this day. Intel went to every publisher and network, and negotiated fabulous volume discounts for everyone who participated in the program. Publishers were excited because the program appeared to bring them many new advertisers and helped prove the value of advertising. The computer manufacturers got better rates through the program than they would have buying rate-card prices, and Intel substantially reduced the total cost for its own advertising while maintaining high exposure for "Intel Inside."

Imagine a similar effect within the supplement segment of your market.>

As such, we would further recommend the development of an ingredient branding initiative for these products. Such an initiative would run a parallel course to your corporate and product branding initiatives.

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