Ingredient Branding-Chapter 7

7/31/2019 Ingredient Branding-Chapter 7

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Boeing Dreamliner


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At the very essence of what all firms do -- business-to-business and business-to-consumer is the creation ofbetter alternatives to what came before: the creation of new

value commonly called IngredientBrand.


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Creation of a Branded Ingredient Often, the primary source of exciting new value for consumers happens way upstream,

in the R&D and new offering realization processes of Business-to-Business (B-to-B)firms, who then send a new ingredient of a spectrum of new offerings down into thevalue chain, where it eventually reaches the end-user/consumer.

As these upstream B-to-B firms create new value, the downstream impact for the end user are linear or incremental and create small changes in downstream offeringscompared to the current alternatives.

Their impact may be to reduce cost upstream, or enable an offering manufacturer orOriginal Equipment Manufacturer (OEM) to label a current offering New andImproved or list another feature or benefit among many .

Occasionally, however, upstream firms, through investments in R&D, genuineunderstanding of downstream customer need, various breakthroughs create largebursts of value where that value has significant impact delivered downstream to the enduser.

If such a situation arises, there is an opportunity for the supplier to create a brandedingredient.


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Ingredient Branding Takes Time Often it takes many years before a new product is

introduced to the market. Teflon was invented in 1938 butbecame a consumer known product feature only in the 60s.

Splenda, a low calorie sweetener was invented by Johnsonand Johnson in the 70s but brought to large consumerattention only in the late 90s.

The most significant example is the Intel Inside campaign

where Intel utilized the power of performance of itsprocessor chip design to tell the end customer that theiroffering is special compared to the offerings of the 25competitors at that time.


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Boeing DreamlinerNew & Innovative Cockpit New & Gorgeous Cabin


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Boeing Dreamliner1. Unmatched FuelEfficient Feature

2. Exceptionalenvironmentalperformance

3. The airplane uses 20percent less fuel thantoday's similarly sizedairplanes.

4. It travels at a similar

speed as today's fastestwide bodies, Mach 0.85.

5. Airlines will enjoy morecargo revenue capacity.


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New Features of Dreamliner that

can lead to Ingredient BrandingModern systems architecture is at the heart of the 787's design. An interior environment with higher humidity to increased comfort and convenience. Exceptional performance because of new technologies developed and applied on the

airplane. Composite materials make up 50 percent of the primary structure of the 787 including

the fuselage and wing. Simpler than today's airplanes and offers increased functionality and efficiency. Has incorporated airplane health-monitoring systems that allow the airplane to self-

monitor and report systems maintenance requirements to ground-based computersystems.

New engines from General Electric and Rolls-Royce are used on the 787. Advances in engine technology are the biggest contributor to overall fuel efficiency

improvements. The new engines represent nearly a two-generation jump in technology for the middle of

the market. New technologies and processes have been developed to help Boeing and its supplier

partners achieve the efficiency gains. Manufacturing a one-piece fuselage section has eliminated 1,500 aluminum sheets and

40,000 - 50,000 fasteners.


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Potentil Benefits

of Ingredient BrandingIngredient branding can bring the following benefits to the ingredient creator:

Higher prices greater value harvest over the ingredient life, held upstream. Greater bargaining power/control of the ingredient users.

Greater bargaining power/control of channel partners. The creation of a separate brand, a market based asset which accrues to the

ingredient creator. Additional downstream pull for products from users, thereby increasing cash

flows for the creator. An ongoing creation of expectation downstream from consumers that the

ingredient creator will continue to create new ingredients accelerating uptakeof new ingredients, both for the ingredient users and the consumer.

Greater clarity and control of communication of the consumer benefit createdby the ingredient.

An endorsement for weaker brands downstream, enabling them to participatein markets against stronger brands creating a more level playing field for theingredient creator.


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Downside of Ingredient Branding Ingredient branding as a multi-stage marketing process

needs careful planning and accurate monitoring.

If this management task is not properly done ,it can lead tounfortunate market situations.

In addition the investment can not be underestimated.Severe losses on investments can result on account of afailed Ingredient Branding.


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Potential Conflicts

on Ingredient Branding Backlash from the user/OEM and the channel that may be brought by

some loss of control: Since the ingredient creator takes more control of communication

to the end user and, thus, gain end user loyalty, the OEM might feel

left out. Investment/Costs:

High real costs involved in establishing the brand identity andbrand elements. The ingredient creator invests separately from theingredient users by making direct investments in thecommunication of the ingredient brand .

Brand Conflicts: Existing partner relationships could jeopardize the balance of

power between the partners.

Value Flows/Multiple effects: The injection of a new brand in the process of marketing down the

value chain can have a myriad of effects which sets up a rathercomplex effects base.

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Ingredient Branding-Chapter 7