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Journal of Marketing and Management, 3 (1), 60-77, May 2012 60
Perceived Impact of Ingredient Branding on Host Brand Equity
Prof. Kavita Tiwari, Dr. Rajendra Singh
AICAR B-School, Navi Mumbai, India
[email protected], [email protected]
Abstract
The aim of the study is to discuss and estimate the perceived impact of ingredient branding on
host brand in terms of brand equity. For the purpose of our study, we will measure the impact in
terms of association, neutral and disassociation of ingredient brand with host brand. In this study
many theories and models is studied to identify the potential factors of ingredient branding. The
research methodology adopted for the analysis in our study is to some extent a replica of
previous studies conducted within ingredient branding. We conducted a survey based on
questionnaire method. For which a close ended structured questionnaire on 5- point Likert scale
basis is being designed .The survey was conducted among 212 respondents consisting of
customers in Indore city. While doing this research we have gained insights on how several
aspects of our study could have been conducted differently. We recommend that a similar study
should be conducted again, this time with well known host brands and ingredient brands that
focus on utilitarian needs from a consumer perspective. A more representing respondent group
would also increase the arguments for generalization among a wider population. By using SPSS
we can conclude that the perceived impact of various factors of ingredient brands on host brand
and its brand equity.
Journal of Marketing and Management, 3 (1), 60-77, May 2012 61
Keywords: Branding, Brand Equity, Host Brand, Ingredient Brand, Ingredient branding and
Perceived Quality
Introduction
A brand is the identity of a specific product, service or business. A brand can take many
forms, including a name, sign, symbol, color combination or slogan. The word brand began
simply as a way to tell one person's cattle from another by means of a hot iron stamp. A legally
protected brand name is called a trademark. The word brand has continued to evolve to
encompass identity - it affects the personality of a product, company or service. The American
Marketing Association describes a brand as a „„name, term, sign, symbol or design, or a
combination of them intended to identify the goods and services of one seller or group of sellers
and to differentiate them from those of competition.‟‟ Most importantly, a brand is the source of
a promise to the consumer. It promises relevant differentiated benefits. Everything an
organization does should be focused on enhancing delivery against its brand‟s promise.
Combining a few different definitions, a brand is the name and symbols that identify:

The source of a relationship with the consumer.

The source of a promise to the consumer.

The unique source of products and services.
Brand equity is the commercial values of all associations and expectations (positive and
negative) that people have of an organization and its products and services due to all experience
of, communications with, and perceptions of the brand over time. This value can be measured in
several ways: as the economic value of the brand asset itself, as the price premium (to the end
Journal of Marketing and Management, 3 (1), 60-77, May 2012 62
consumer or the trade) that the brand commands, as the long-term consumer loyalty the brand
evokes, or as the market share gains it results in, among many others. From an economist‟s
perspective, brand equity is the power of the brand to shift the consumer demand curve of a
product or service (to achieve a price premium or a market share gain). To use a metaphor, brand
equity is like a pond. People may not know how long the pond has been around or when it first
filled with water, but they know that it supports life, from fish and frogs to ducks and deer. It
also may be a source of recreation, irrigation, and possibly even human drinking water. Clearly it
is a valuable resource. But many people take the pond for granted. It seems as if nothing can
diminish its supply of water, but yet we sometimes notice that it rises with the spring rains or
lowers after a long drought or excessive overuse for irrigation. Similarly, brand equity is a
reservoir of goodwill. Brand-building activities consistently pursued over time will ensure that
the reservoir remains full. Neglecting those activities or taking actions that might deplete those
reserves will reduce the reservoir, imperceptibly at first, but soon all too noticeably until it is too
late and all that is left is mud.
Co-branding, which consists in marketing a product representing two brands or more, is
increasingly used. There are different ways in which co-branding may be turned to advantage.
Among these are reduced investment costs and risks, or faster paybacks (Boad, 1999). The
literature distinguishes two types of co-branding strategies: symbolic co-branding and ingredient
branding. The first strategy consists in associating to the host brand a second brand that will give
it symbolic additional attributes (Cegarra and Michel, 2000). In the second one, key attributes of
one brand are incorporated into another brand as ingredients (Desai and Keller, 2002). In the
French co-branding literature, Michel and Cegarra (2003) further state that, apart from
collaboration on physical attributes, ingredient branding can also be a combination of two
Journal of Marketing and Management, 3 (1), 60-77, May 2012 63
recognized know-how or expertise to manufacture the co-branded product. In a co-branding
context, the host brand is the “brand originary from the product category in which the co-branded
product is launched” (Cegarra and Michel, 2000), while the ingredient brand is the brand that
manufactures the ingredient, or possesses the know-how, to be incorporated into the final
product.
Co-branding, and especially ingredient branding, is becoming increasingly popular among
marketers. Previous research has shown the benefits (Norris, 1992) and negative effects
(Shocker, 1995) of such a strategy for the brands involved, or its impact on consumer product
evaluations (Hillier and Tikoo, 1995). The initial perceived quality of and attitude toward the
partner brands might have implications on the outcome of an ingredient branding strategy, as
well as on the selection of ingredient brands by host brand managers. The aim of this exploratory
study is to examine if and how the elements formerly introduced influence the outcome of an
ingredient branding operation for the host brand.
We define, Ingredient Branding - as a process of bountiful identity and recognition to goods
or services through uplifting the identity and recognition of its key ingredients or components
through direct marketing communication with the final consumer and/or multiple parties on the
market.
Review of Literature
An ingredient brand is exactly what the name implies: an ingredient or component of a
product that has its own brand identity. In the light of the success stories of Intel, Gore Tex,
Dolby, TetraPak, Shimano, and Teflon it can be expected that component suppliers will
increasingly use ingredient branding strategies in the future. Replete with insightful case studies
Journal of Marketing and Management, 3 (1), 60-77, May 2012 64
of companies from a variety of industries that have successfully transformed their traditional
brands into powerful new in brands, and have launched entirely new products and services
employing in branding or I=ingredient branding.
According to Aaker (1991), it provides a reason-to-buy and a point of differentiation It
can be viewed as a set of assets linked to the brand, these assets including brand loyalty, name
awareness, perceived quality, and associations (Aaker, 1991). In fact, Aaker (1991) highlighted
that all the brand equity dimensions have causal interrelationships. For instance, perceived
quality will in part be based upon associations (Aaker, 1991).
Ingredient branding should be top on the list for all CMOs to read whose companies‟
"live or die" based upon the success of their brands. Branding is considered as a major success
factor of many products and services, both in consumer and industrial markets. The value of
branding has also been recognized by suppliers who produce ingredients or components that are
incorporated into final products (Norris, 1992). This strategy can be very beneficial to both
partner brands if successfully implemented (Norris, 1992). Keller (1993) viewed it as the
perceptual beliefs about a brand's attribute, benefit, and attitude associations, which are
frequently seen as the basis for an overall evaluation of, or attitude toward, the brand.
Consumers‟ perceptions of the co-branded product quality can, in turn, improve or reinforce the
quality image of the host brand (Rao and Ruekert, 1994).
According to Rooney (1995), a branding strategy is essentially aimed at building the
brand image, increasing the brand‟s value to the customer which leads to brand loyalty. Branding
strategy is essentially aimed at building brand image (Rooney, 1995). Therefore, the host brand
entering an ingredient branding initiative can expect positive effects from such a strategy on its
perceived quality, associations, and attitude. Indeed, a host brand will use ingredient branding to
Journal of Marketing and Management, 3 (1), 60-77, May 2012 65
improve its brand equity, and more particularly its associations (cognitive dimension of the
attitude toward the brand), overall evaluation (affective dimension), as well as its perceived
quality.
According to Changeur and Dano, 1996, “Brand equity is added value that a brand brings
to a product. Brand associations correspond to „the mark left in consumers‟ memory by all the
communications and products of the brand.” Simonin and Ruth (1998) highlighted that “The line
of research focused on consumer perceptions becomes even more critical for academics and
practitioners alike.” Moreover, Simonin and Ruth (1998) argued that “brand alliance evaluations
have spillover effects on attitudes toward each partner brand”.
Co-branded products can provide a clue to product quality, leading to improvement of consumer
product evaluation and acceptance (McCarthy and Norris, 1999). McCarthy and Norris (1999)
also examined how consumers evaluate moderate- versus higher-quality host brands where
branded ingredients are added to the product. They manipulate different host brands of varying
quality (moderate- or high-quality) and high-quality ingredient brands. Their findings suggested
that consumers evaluate a moderate-quality host brand more favorably when a high-quality
branded ingredient is added, and that a high-quality host brand is only slightly more favorably
valued when featuring a high-quality branded ingredient. According to, Michel (2000) and
Lendrevie and Lindon (2000), further distinguish three dimensions of the attitude toward the
brand. “The first dimension is the cognitive component, which concerns the knowledge
accumulated about the brand.” Rust, Lemon, and Narayandas (2005) argued that, “customer
attitude toward the brand is critical in building brand equity.” That if customers develop more
favorable attitudes toward the brand, they are more likely to purchase the brand.”
Journal of Marketing and Management, 3 (1), 60-77, May 2012 66
Taking the same moderate-quality host brand and an ingredient brand of varying quality,
it is inferred that the initial perceived quality and perceived impact of these ingredient brand will
influence the quality perception of the host brand. According to Peter Schnedlitz and Stefan Zopf
(2009) , in one of their article named as “Using Tetra Pak as an example of an ingredient brand” ,
examined whether an ingredient brand can be proved to have an added value affecting the market
strength of the final product. According to Kotler (2010), ingredient branding is defined as the
marketing or labeling of components or other industrial goods the promotion of a brand
(Ingredient) within a brand (Host) to the final customer .It takes advantages of synergy of two or
more brands that share a common brand within the value chain of the product. In other words,
Kotler (2010), states that “The Ingredient Brand provides an increased performance credibility of
specific featured benefit associated with the brands perceived expertise. “
Objectives of the study

To study the perceived impact of ingredient branding on host brand.

To analyze the perceived impact of ingredient branding on host brand equity.
Research Methodology
The study is based mostly on restoring the primary data collected through the method
random sampling. The place of survey we have chosen is Indore. Preparing a structured and nondisguised type of questionnaire. We administered to 212 respondents .Our thrust was to
determine the perceived impact of ingredient branding on host brand equity. We prepare set of
30 statements reflecting various attributes of the problem. The respondents were requested to
rank the statements on a 5-point Likert scale basis (from strongly disagree to strongly agree).
Journal of Marketing and Management, 3 (1), 60-77, May 2012 67
Factor analysis was done to identify the factors of Ingredient branding which has perceived
impact on host brand equity by adopting ingredient branding. We imported the data on SPSS to
analyze the same for the study.
Demographic profile of the respondents
Out of 212 respondents, 132 are males and 80 are females. Qualification status of the
respondent‟s shows that 29% respondents were qualified Upto 12
th
54% respondents are
graduate, 15% respondents are post graduate and only 2 respondents were found illiterate. Apart
from this, the category of respondents which we found are as : Around 67% Customers‟
purchasing decision depends solely on ingredient brand for (Food products, cosmetics
,oil,cloth,food product etc) which ultimately put impact on Host brand equity of these and other
products. And also 17% Retailer, 13% Wholesaler and rest 3% are company executives were
also responded for the same.(Refer to Table 1 )
Table 1: Characteristics of Respondents:N=212
No. Of Respondents
Gender:
Male
132
Female
80
Qualification :
Upto 12
63
Graduate
115
PG and
above
32
Illiterate
2
Respondent Category :
Customer
143
Retailer
38
Wholesaler
28
Company
4
Journal of Marketing and Management, 3 (1), 60-77, May 2012 68
Analysis, Interpretation and Results
Reliability Measurement
Thirty variables were identified for use in the survey .Cronbach‟s Alpha is the most
widely used measure of reliability. The generally agreed upon lower limit for Cronbach‟s Alpha
is 0.7, although it may decrease to 0.60 in exploratory research. Table 2 shows that the variables
used resulted in a Cronbach‟s Alpha value of 0.8239 which is greater than 0.7, and hence
establish the reliability of the scale developed by the authors.
Table 2: Reliability Analysis.
Reliability Coefficients
N of Cases = 212.0
N of Items = 18
Alpha = .8239
Factor Analysis
KMO measure of sampling adequacy and Bartlett’s test of sphericity:KMO measure of sampling adequacy is an index used to test appropriateness adequacy of
the factor analysis .The minimum required KMO is 0.5. Table 3 shows that the index for this
data is 0.772 and chi-square statistics is significant (0.000 < 0.05).This means the principal
component analysis is appropriate for this data.
Bartlett‟s test of sphericity is used to ensure that the variables are uncorrelated in the population.
High correlation is required among the variables for the application of factor analysis .Therefore,
we test for the null hypothesis that the population correlation matrix is an identity matrix (I.e.
each variable correlates perfectly with itself, but is uncorrelated with the other variables). Table 3
Journal of Marketing and Management, 3 (1), 60-77, May 2012 69
shows that the result of Bartlett‟s test (the chi-square value is 517.427 at 0.000 significance
level) clearly rejects the null hypothesis that the population correlation matrix is an identity
matrix. Therefore we can proceed with factor analysis.
Table 3: KMO and Bartlett‟s Test:KMO an d Bartlett's Test
Kaiser-Mey er-Olkin Measure of Sampling
Adequacy .
Bart let t's Test of
Sphericity
Approx. Chi-Square
df
Sig.
.772
517.427
136
.000
According to Kaiser Criterion, only the first six factors should be used because subsequent
Eigen values are less than one.
The output in Table 4 gives the variance explained by the initial solution .This table gives
the total variance contributed by each component .We may note that the percentage of total
variance contributed by the first component is 21.343, by second component is 8.640 and by the
third component is 7.476.It may be noted that the percentage of total variances is the highest for
the first factor and it decreases thereafter. It is also clear from this table that there are total three
distinct factors for the given set of variables.
Journal of Marketing and Management, 3 (1), 60-77, May 2012 70
Table 4:-Total Variance Explained
Initial Eigen values
Compo
Nent
1
2
3
4
5
6
Extraction Sums of Squared
Loadings
% of
Cumulative Total % of
Cumulative
Variance %
Variance %
21.343
21.343
3.628 21.343
21.343
8.6403
29.984
1.468 8.6403
29.984
7.476
37.46
1.27 7.476
37.461
6.425
43.886
1.092 6.425
43.886
6.244
50.131
1.061 6.244
50.131
6.021
56.151
1.024 6.021
56.151
Total
3.628
1.468
1.271
1.092
1.061
1.023
Rotation Sums of Squared
Loadings
Total % of
Cumulative
Variance %
2.054 12.087
12.087
1.813 10.665
22.753
1.613 9.488
32.242
1.54 9.0637
41.305
1.366 8.037
49.343
1.157 6.808
56.151
Extraction method: Principal component
analysis
Scree Test
Figure 1 shows Scree plot. It gives the number of factors against the Eigen values, and
helps to determine the optimal number of factors .The factors having the steep slope indicate that
larger percentage of total variance is explained by that factor. The shallow slope indicates that
the contribution to total variance is less. In the above plot, the first three factors have steep slope
and later on the slope is shallow. It may be noted from the above plot that the number of factors
for Eigen value greater than one are three. Hence ideal number of factors is 3.
Figure 1 Scree Test:-
Sc ree Plot
4
3
Eigenvalue
2
1
0
1
2
3
4
5
6
Component Numbe r
7
8
9
10
11
12
13
14
15
16
17
Journal of Marketing and Management, 3 (1), 60-77, May 2012 71
Rotated Component Matrix:
Table 5 is the most important table for interpretation .The maximum of each row
(ignoring sign) indicates that the respective variable belongs to the respective component. The
variables „Perceived quality and Attitudinal Loyalty‟ are highly correlated and contributed to a
single component. „Measuring host brand equity‟ contributes to second component. And „top of
mind, Price enhancement, Brand loyalty, Reduces marketing cost , Anchor , Familiarity , Brand
reliability, Marketing outlay , Brand extension , Trade leverage ,Positive brand association ,
Trustworthiness, Perception ,Convenience and Compliance‟ contribute to the rest of the
components respectively.
Journal of Marketing and Management, 3 (1), 60-77, May 2012 72
Table 5: Rotated Component Matrix
Component
Perceived
Quality
Attitudinal
loyalty
Measuring
host brand
equity
Top of mind
Price
enhancement
Brand
loyalty
Reduces
marketing
cost
Anchor
Familiarity
Brand
Reliability
Reduces
Marketing
outlay
Brand
extension
Trade
leverage
Positive
brand
association
Trust
worthiness
Perception
convenience
Compliance
1
2
3
4
5
6
0.609
0.294
0.031
0.072
0.070
0.098
0.632
-0.021
0.011
0.277
0.103
0.158
0.304
0.566
0.169
-0.029
-0.245
0.452
0.194
0.104
0.098
0.696
0.067
-0.030
0.124
0.471
0.145
0.066
0.599
-0.150
0.362
0.098
0.357
0.455
-0.164
-0.0631
0.06
0.168
0.155
0.396
0.256
0.136
0.065
0.212
0.635
-0.029
0.017
0.092
0.296
0.051
0.021
0.143
0.054
0.804
0.303
0.584
0.089
0.27
0.066
-0.138
0.117
-0.114
0.092
0.106
0.815
0.179
0.634
0.148
0.035
0.128
0.070
0.093
0.002
0.445
0.359
-0.259
0.368
0.011
0.394
0.346
0.102
0.421
0.007
0.097
-0.139
0.136
0.664
0.227
0.032
0.236
0.513
-0.119
0.505
-0.273
0.029
-0.310
0.067
-0.023
0.732
0.089
0.029
0.014
Extraction Method: Principal Component Analysis.
a) Rotation Method: Varimax with Kaiser Normalization.
b) Rotation converged in 6
iterations.
c) Al stands for Attitudinal
loyalty
Journal of Marketing and Management, 3 (1), 60-77, May 2012 73
Interpretation of the Results
Table 6: Interpretation and Results.
Factor
Facto
r No.
Label
s
Factor
Name
Statement
Loadings
F1
S1
Perceived
quality
Ingredient Branding adds quality to the host brands equity
0.609
Ingredient Branding increases attitudinal loyalty toward the
host brand equity.
Ingredient Branding helps in creating positive brand
associations with the host brand.
Ingredient Branding assures for the convenience perceptions
towards the host brand
Ingredient Branding helps in measuring of Host brand equity at
market place.
Ingredient Branding acts as an anchor to which other
association with the host brand increases.
Ingredient Branding helps in enhancing brand extensions of
host brand.
Ingredient Branding helps in providing trade leverage of host
brand.
Ingredient Branding increases trust worthiness of the host
brand.
Ingredient Branding helps in making the host brand
compliance.
Ingredient Branding helps in making Top-of-mind brand
associations with the host brand.
Ingredient Branding reduces marketing cost of host brand.
0.633
S15
S25
S29
F2
S16
Brand
esteem
S21
S23
S26
F3
S28
Reliability
S30
F4
S17
Memorabl
e
S20
S19
S27
F5
18
Cost
effective
24
F6
22
Likeability
Ingredient Branding supports in increasing the brand loyalty of
host brand.
Ingredient Branding helps in creating positive brand
associations with the host brand.
Ingredient Branding enhances price of host brand sensitivity
Ingredient Branding reduces outlay involved in marketing of
host brand.
Ingredient Branding creates familiarity of the host brand.
0.634
0.514
0.566
0.635
0.585
0.446
0.665
0.732
0.697
0.397
0.455
0.421
0.601
0.815
0.804
Naming of the Factors:
A factor loading represents the correlation between an original variable and its factor.
The signs are interpretated just like any other correlation coefficient. On each factor „like signs‟
Journal of Marketing and Management, 3 (1), 60-77, May 2012 74
of factor loading means factors and factors are positively correlated and „opposite signs‟ of factor
loadings means that factor loadings and factors are negatively correlated. The names of the
factors , statement labels and factor loading are summarized in Table 6, which has been
formulated from SPSS data output.
Factor 1: Perceived Quality
It is one of the most important factor, statements such as „Ingredient Branding adds
quality to the host brands equity (0.609)‟, „Ingredient Branding increases attitudinal loyalty
toward the host brand equity(0.633)‟, „Ingredient Branding helps in creating positive brand
associations with the host brand (0.634)‟, and „Ingredient Branding assures for the convenience
perceptions towards the host brand (0.514)‟. This factor signifies that the ingredient branding
help in increasing the quality of host brand by enhancing through brand extension, convenience
perception and attitudinal loyalty which in turn also supports brand equity.
Factor 2: Brand Esteem
This is second significant factor comprises of statements viz.,‟ Ingredient Branding helps
in measuring of Host brand equity at market place (0.566),‟ „Ingredient Branding acts as an
anchor to which other association with the host brand increases(0.635),‟ „Ingredient Branding
helps in enhancing brand extensions of host brand (0.585),‟ and „Ingredient Branding helps in
providing trade leverage of host brand(0.446)‟.This factor indicates Brand esteem is the most
important factor that host brand enjoys by opting ingredient branding.
Journal of Marketing and Management, 3 (1), 60-77, May 2012 75
Factor 3: Reliability
Two factors are been loaded on to this factor. The factor „Reliability‟ is the third
significant factor. The statement –„Ingredient Branding increases trust worthiness of the host
brand(0.665)‟, and „Ingredient Branding helps in making the host brand compliance(0.732)‟.
This implies that ingredient branding helps in increasing the reliability towards the host brand.
Factor 4: Memorable
Four factors have been loaded on to this factor. The factor „Memorable „is the fourth
significant factor. The statements „Ingredient Branding helps in making Top-of-mind brand
associations with the host brand (0.697), „Ingredient Branding reduces marketing cost of host
brand (0.397)‟, „Ingredient Branding supports in increasing the brand loyalty of host
brand(0.455) and „Ingredient Branding helps in creating positive brand associations with the host
brand (0.421)‟. This implies that ingredient branding helps in making the host brand memorable
by earning brand loyalty so that to create image the top of mind brand choice of the customer.
Factor 5: Cost effective
This factor comprises of two factors, „Ingredient Branding enhances price of host brand
sensitivity (0.601), and „Ingredient Branding reduces outlay involved in marketing of host brand
(0.815). This implies that ingredient branding not only supports and enhance price of host brand
sensitivity but also helps in reducing involved outlay in host brand.
Factor 6: Likeability
Journal of Marketing and Management, 3 (1), 60-77, May 2012 76
Single statement has been loaded on to this last factor that is „Ingredient Branding creates
familiarity of the host brand (0.804). This factor emphasizes that ingredient branding helps in
creating good acquaintance for the host brand.
Conclusion
The concept behind the study is concerned with the evolution of ingredient branding tied
to the host brand. To better understand the impact of various factors on ingredient branding and
it‟s perceived impact on host brand equity ,many factors has been identified through exploratory
study and comes out with the selected factors which have their major impact on study by using
Factor analysis , those factors are : co-branding , perceived quality attitudes towards the brands ,
Brand esteem , memorablility, Reduce Market outlay , reliable and likeability are the major
factor which ultimately found under ingredient branding as a result of which the host brand
equity gets supported.
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