No matter where your business is in the supply chain, it pays to invest in building a strong brand, writes Stuart Whitwell, joint managing director, Intangible Business.
In tough economic times, many companies are looking towards creative solutions to add value to their business brands - reinforcing customer loyalty in the hope of securing future success.
‘Ingredient branding’, a concept relatively unexplored and rarely successfully harnessed, is one such innovative solution that helps boost business prospects.
Branded products are primarily associated with the manufacturer or retailer of the final product - if asked where an item of clothing is from, you’d be unlikely to reply with China instead of, say, Topshop.
Goods on the whole are associated with their marked brand, not the factory they were built in, nor where the materials were sourced from, even though chances are the retailer doesn’t have control of this entire supply chain.
Goods made in a factory that use the Topshop logo, sewn in as a brand promise to the customer, will funnel the value of the product into the Topshop brand alone, rather than distributing it across the whole supply chain.
For this reason, there is a growing trend for suppliers lower down the chain to implement their own strategic branding of their products, providing the ingredient can demonstrate that it offers increased value to the host brand.
Ingredient branding is just what it says on the tin: branding the ingredients that go into the final product - a proven approach that can add significant value to the overarching brand.
Successful ingredient branding establishes a clear connection in the mind of the consumer between the brand message and the specific value of the branded ingredient.
The more distinct the message is in differentiating the product from its competition, the more intuitive the connection becomes.
For example, Intel and Woolmark work as ingredient brands as they indicate a set of quality values at the manufacturing stage.
Both brands succeed in assuring the consumer of a reliably constructed quality product, thereby increasing the value of the final experience, as well as providing vast exposure for the ingredient brand.
For instance, the Woolmark label has been seen on over two billion products since its inception in 1964.
On the other hand, Lycra and Gore-Tex are examples of branding at a material level, whereby the final product benefits by the associated superior functions of the branded material, in this case flexibility and being waterproof.
Over time, ingredients can even succeed in transcending their brand names entirely. Kevlar has arguably become as much a viable way of describing what something is made of as wood or plastic, such is the strength of its functional associations.
Once the brand has been built so it is easily recognised by buyers, the next step is to infiltrate the consumer market with the business’ messages, as Intel and Woolmark have.
This is often the final step and involves careful contract negotiation with the companies at the end of the supply chain to ensure the brand logo or name is communicated in the final product.
An established and proven reputation in the buyer market will boost a company’s chances in breaking into the consumer market.
This branding approach also allows B2B companies to compete with overseas suppliers in Asia, where often cheap labour facilitates cheap materials, pricing competitors out of the market.
Premium positioning through branding allows ingredient companies to compete on factors other than price - the goods they supply are no longer seen as a commodity, but rather a valuable component contributing to the worth of the final product.
As the examples above illustrate, investing in building a strong brand - no matter where your business is in the supply chain - helps to boost buyer and consumer loyalty, while also setting the company apart in an increasingly competitive landscape.
Communicating values of quality and consistency in a recognisable way that is relevant to the target market will ensure brand value is built for ingredient brands, adding to the company’s overall position in the market.