What's Inside?: A Case for component/Ingredient Branding

EFFECTIVE EXECUTIVE  NOV.2009

ORGANIZATIONAL LOYALTY

What's Inside?: A Case for component/Ingredient Branding

-- Anurag Dugar, Raj Kumar Pillay

The challenge for marketers is always to come up with new ways to talk to the consumers. This article compares two such ways – one, `Celebrity Endorsements' and the other, `Component Branding'. The former is over-used and the latter, underrated. The article presents a case for component branding through some real life cases.

^"Yet another new jargon," you must be thinking. But, frankly speaking, when it comes to management, jargons can never be enough and outdated. However, this is not entirely `new'; marketers have been using `component branding' for quite some time now.

With the information thrown in from all sides, consumers, every now and then, tend to stop listening to what a brand has to say. As this happens, marketers are forced to think about newer ways to win more mind share and market share.

Way back, marketers came up with the idea of `Celebrity Endorsements' which gave a reason to consumers to remember the brand by associating it with a celebrity. The idea worked well and to a large extent is still doing a good job.

However, it is not only students who do "cut, copy, and paste", but most people and organizations are avid followers of this technique and marketers are no exception. As a result, with every other marketing communication using some celebrity or the other, this idea of using `celebrities in marketing communication' has started to lose its sheen.`Overuse of celebrities' was one major reason for this, but apart from that there were some other problems as well, like:

• The use of a celebrity for a particular brand could not be kept exclusive. So, Amir Khan who worked for Pepsi at one point of time, later worked for arch rival Coke as well and Shah Rukh `Mayur' Khan was seen endorsing Belmonte recently.

• It is easy to get a celebrity to endorse a brand but it is difficult to find the right celebrity who connects with the brand value(s). From the creative perspective, few marketers were able to identify and use celebrities in a way that adds value to the product/brand. One great example is Cadbury's use of Amitabh Bachchan which, according to the Associate Partner of O&M (the ad agency handling Cadbury's account) played a vital role in the revival of Cadbury brand in the times of crisis. Otherwise, in general, the effectiveness of using Shekhar Suman and Navjot Siddhu for invertors can be put under scanners.

• Another important issue was the impact of a celebrity's fluctuating image on the brand. A lot of research which has been done in this area clearly suggests that connecting a brand with a celebrity is not just using the good and famous part of the celebrity. It indirectly associates the brand with everything that happens in the celebrity's life, whether good or bad. So, when some of the cricketers were accused of match fixing, Pepsi and Royal Stag were forced to change their brand ambassadors almost overnight.

• Increasing demand for celebrities has forced a sharp rise in the prices that they charge. It is getting increasingly costly to get popular celebrities to associate with a brand (less popular celebrities do not work as well in terms of recall which a marketer looks for). Not every organization is a Pepsi, who can sign the Michael Jacksons of the world.

• Last, but not least, the over use of celebrities in advertisements, dilute their effectiveness to an extent as well. So, consumers do not get as excited when they watch yet another celebrity appearing in yet another advertisement.

However, this doesn't mean that celebrity endorsements are not effective. Apart from other benefits, celebrity endorsements have proven their effectiveness in building `instant connect' and that is where the advantage lies. They save a lot of time (and hence a lot of resources) in connecting with the target audience.

Anurag Dugar is presently an Assistant Professor (Marketing) at Leeds Metropolitan India campus. He has more than a decade of enriching experience in industry and academics. He has been associated with top names in both sectors, like – Indian Institute of Management (Bangalore), Icfai (Hyderabad), Amity Business School (Jaipur), Usha International Limited (Jaipur), NBSPL (Mumbai) etc. He is a qualified MBA, and has submitted his PhD thesis on Marketing of Petroleum Brands in India. He has published various articles in several national and international magaines. He is also a regular contributor to conferences and has presented papers at various prestigious international and national level conferences. He is currently writing a book on Services Marketing, and his areas of research interest are Product and Brand Management, and Consumer Behavior. Raj Kumar Pillay is an academician having around two decades of experience. He is a holder of Master's Degree in Statistics and also an MBA with specialization in finance. He has taught Finance and Quantitative Techniques for Managers at both undergraduate and postgraduate levels. He is an energetic and inspiring educator.

Since it is marketers' responsibility to break the clutter which was created by overuse of celebrity as well as similar product features, the question that arises is: What else can be used and/or done to make consumers remember and buy the brand?

With this question in mind, some marketers got creative and came up with an interesting solution—use the components inside the products to highlight the brand. Yet another brand association, but it was a great find for the marketers.

The Case of Intel Inside

In 1991, Intel partnered with computer manufacturers and started using the punchline—`The Computer Inside' which later became the world famous `Intel Inside' campaign (see Exhibits I and II). This was an interesting move from a `component supplier' but the manufacturers failed to foresee its impact. This campaign was actually telling the consumers that – the sign `Intel Inside' on a computer means a powerful and a fast computer.

Till today, most people don't even know what Intel makes and what `Intel Inside' means. Also, they are clueless about what exactly a microprocessor is and its use inside the computer, but still everybody wants an `Intel Inside'.

By the time computer manufacturers realized that it has become difficult for them to sell their computers without this `Intel Inside', it was too late. In other words, now their computers' sales have become dependent on a `component brand'. This forced the computer manufacturers like HP, Acer, Lenovo etc., to highlight the `Intel Inside' logo all the more, and for doing that they needed Intel's microprocessors.

This created a unique advantage in favor of Intel. As more computer manufacturers started using `Intel Inside', the demand for `Intel Inside' rose, creating more demand for Intel's processors. There was a time when manufacturers were completely dependent on the ingredient supplier – Intel.

The Case of Tata Salt

Another prolific case can be of `Tata Salt'. Tata Salt was presented to the consumers with "Iodine Guarantee" (See Exhibit III). This insight came from the government's communication stating the benefits of Iodine in the prevention of Goitre, a deadly disease.

The reliability of the message increased manifolds with Government also telling the benefits of having iodine in salt. With this clear benefit and increased reliability, positioning salt having `iodine' as added ingredient became a hit. No wonder, Tata Salt is still the market leader in its category.

Interestingly, it was not that other brands of salt did not have iodine, it is just that Tata Salt captured this value proposition first and sat tight on it. It became highly difficult for the competitors to create another unique consumer benefit for a commodity like salt.

Moreover, competitors were not able to highlight `iodine' in their brands (in spite of having it as a component) as strongly because then they would appear to be telling the consumer that theirs is a "me too" brand. This image for any brand is equally harmful.

The Case of Coconut Oil Brands

In this mature category of coconut oils, Marico's Parachute has been an undisputed leader and is positioned as "100% pure coconut oil". Dabur wanted to enter this category but wondered whether it can break this "100% pure coconut oil" image of Parachute.

Prima facie, the idea seemed bad. This is because if you look at the history of this category, you will find that it is full of examples of failed attempts made by very strong companies to break Parachute's stronghold. The list includes big names like – Tata and HUL (with Nihar brand of Coconut oil) and brands like Shalimar, which failed miserably when they tried to beat parachute on "pure coconut oil" premises.

Dabur, instead used its `ingredients' and positioned its `Vatika' as `Enriched Coconut Oil' (See Exhibit IV) that offers additional benefits of lemon, amla, henna etc. By doing this, Vatika offered additional value. It differentiated itself from parachute and rather claimed more benefits than "mere coconut oil" which parachute was offering. This not only gave advantage to Dabur, but created a totally different category which was based on the benefits of `ingredients'.

Other Cases

Apparently many companies seems to have jumped on the bandwagon, with Head and Shoulders shampoo using ZPTO for fighting dandruff, Bajaj using DTS Si engines, Pantene using Vitamin E for preventing hair fall, Zandu using Sona and Chandi (Gold and Silver) in its chyawanprash, Nokia using Karl Zeiss optics in its phone cameras and the latest addition can be Maruti's K Series engines and HUL's Cif with dirt busters. The list can go on and on.

Conclusion

The above cases were all successful examples wherein even commodities were turned into powerful brands, just by using the `components' or `ingredients' creatively and intelligently. Component branding gives clear advantages like:

Connecting components or ingredients to specific `benefits' is relatively easy and this gives a vital advantage to the marketer wherein the consumer gets yet another `clear' reason to buy the product as connecting celebrities with benefit(s) is more of an `invisible' kind of message which the consumer might not be able to decode or different people might draw different meanings out of. If this happens, the whole effort and money may go in vain. Look at some of the questions:

• Celebrity endorsements are often based on the premise that the celebrity's image conveys some specific meaning. So, how will customers (or potential customers) of ICICI bank, who are not Shah Rukh Khan's fans, will react when they see him `building reliability' for ICICI bank during the times of crisis?

• Isn't it possible that Sachin Tendulkar appearing in an MRF advertisement communicates different meanings to different types of people, especially when the customer profile for MRF includes truck drivers as well as sedan owners? For some, he might represent a reliable person who is a master in his art, but for some he might reflect an aggressive batsman who is about to retire.

Secondly, marketers can copyright the use of ingredient or a component, if they are the first to identify and highlight it, so as to keep it unique and this can be used to give differentiation advantage to the brand for a much longer time. Finally, it is quite economical and safe as well, in comparison to having celebrities as brand ambassadors.

Last but not least, most of the time, component/ingredient branding does not require much investment as well, because it is very much possible that companies might have been using these ingredients since long. They just need to present it as a brand name and associate it with some consumer benefit. In other words, this requires more of creativity and less of money.