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Strategic brand alliances: implications of ingredient branding for national and private label brands Rajiv Vaidyanathan

Associate Professor of Marketing, University of Minnesota, Duluth, Minnesota, USA

Praveen Aggarwal

Assistant Professor of Marketing, University of Minnesota, Duluth, USA

Keywords Brands, Brand equity, Own-label goods, Consumer behaviour, Product quality Abstract Current research on brand alliances has focused primarily on alliances between two known, national brands. However, there is significant benefit to both parties in an alliance between a national brand and a private brand. Such alliances are gaining importance in the industry but have not been studied by marketers. The basic question explored in this study is whether using a national brand ingredient can benefit a private brand without hurting the national brand. First, a theoretical framework to explain how consumers may react to such an alliance is presented. Next, an experiment was conducted which showed that a private brand with a name brand ingredient was evaluated more positively. However, the evaluation of the national brand was not diminished by this association. Implications and future research directions are discussed.

Important imformational role of brands

Introduction Brands play an important informational role for consumers. In their study of the history of development of brands, Low and Fullerton (1994) found that brands allowed consumers to assign identities to different manufacturers' products. Research has also shown that when an existing brand is used to introduce a new product, consumers tend to use their existing value perceptions (as they relate to the original branded product) to evaluate the new offering (Aaker and Keller, 1990). Such extensions, when successful, can be beneficial as they reduce the cost of new product introduction and also enhance the chances of success of such introductions. On the other hand, an unsuccessful extension can hurt the brand because of the negative perceptions generated by such a failure (Aaker, 1996). Whether an extension would enhance or dilute an existing brand's equity is therefore of managerial interest and has been examined in the context of brand extensions and line extensions. Most prior research on co-branding and even ingredient branding has focused on brand alliances between two national brands (e.g. McCarthy and Norris, 1999; Park et al., 1996). However, the impact of extending a national brand to a private label product has not been explored. The research on the expanding role of private brands has suggested that national brand manufacturers may benefit from introducing premium private brands, but has The authors would like to sincerely thank Mark G. Brown, Project Manager at The Pillsbury Company, for his significant contribution to the development of and data collection for this project. He was a graduate student at the University of Minnesota when this study was conducted. The current issue and full text archive of this journal is available at http://www.emerald-library.com

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not considered the possibility of partnering with a premium private brand as an ingredient (e.g. Narasimhan, 1999). The possibility of private brands benefiting from nationally branded ingredients (e.g. Kroger brand cookies with NestleÂ chocolate) has only been recently raised in the literature (McCarthy and Norris, 1999). In this study, we examine how a national brand's extension to a private label product (through ingredient branding) affects the evaluation of both the national brand and the private brand. Such alliances are growing in importance in the computer and Internet arenas and are being considered in a variety of product categories. For example, consider the following: a PC manufacturer of a relatively unknown (generic) brand decides to use the Intel Pentium (a national brand) processor and highlights this association in its promotions. In this study we examine how consumers evaluate such an association. In other words, what impact does it have on the equity of the national brand (Intel) and how does this association benefit (if it does) the private brand product (the generic PC)? Ingredient branding vs brand and line extensions Brand extensions ± the use of an existing brand name for a new product in a different product class ± have been used extensively by many consumer goods organizations. The use of existing brand names to access new markets is based on the premise that established brands have high name recognition and significant consumer loyalty, at least parts of which will get transferred to the new product. Line extensions, on the other hand, involve the use of an existing brand name for introducing new products in the same product category. Whereas both these strategies help reduce the risk of failure for the new product (Reddy et al., 1994), neither of them is available as a strategic option to product managers of generic or private label brands. This is a consequence of the common assumption that private labels have little brand equity that they could possibly leverage. One possible way to partially overcome this constraint is through ingredient branding, whereby private label brands use national brand ingredients and also prominently display this association in their promotions as well as on product packaging. An example would be Safeway Select Chocolate Chip Cookies with Hershey Chocolate Chips. This way, even a relatively obscure private brand can get instant recognition and potentially a more favorable consumer evaluation. No new product

A major distinction between ingredient branding and brand/line extensions is that ingredient branding does not involve introduction of a new product by the national brand owning company. The national brand simply lends its branded product to be used as one of the ingredients for the private brand product. The end product still has to be sold under the private brand label. This has two important implications. First, unlike in the case of brand or line extensions, a company other than the one that owns that established brand stands to benefit from it. Thus, unless or until there are gains associated with this alliance for both the partners, it is not likely to happen. Second, the alliance product has two brand names associated with it ± the private label for the product and the national brand for one of its ingredients. This is different from brand or line extensions where the national brand is typically the sole brand anchor for the new product. For a national brand, ingredient branding offers a couple of benefits. An inherent danger of line extension is that the new product can cannibalize sales of existing products (Reddy et al., 1994). Similarly, one obvious problem with brand extensions is that it could lead to brand dilution if done excessively or to unsuccessful products. Both these limitations are not likely to be there in the case of ingredient branding. Instead of cannibalizing sales,

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ingredient branding can bring in additional (bulk volume) sales for the national brand. Also, as the brand is not being extended to other products, there is likely to be minimal danger of brand dilution over a period of time. Instead, it can be argued that repeated exposure to the brand over different products has the potential of reinforcing a brand name. It has also been argued that, as brands are extended to more unrelated product categories, the associations related to that brand become more abstract (Dacin and Smith, 1994). This may eventually lead to brand dilution as consumers will then not be able to transfer favorable associations to future extensions. This problem also does not exist in case of ingredient branding as the brand does not get `èxtended'' to other products. The established brand continues to be associated with its core product, even though that core product is claimed as an ingredient in another product. Growth of private brands

Private brands and ingredient branding Sales of private label brands have grown considerably in the last two decades. According to Merrill Lynch, the market share of private brands (in units) is currently 19.9 percent and is expected to jump to 23 percent at large food retailers within five years (Supermarket Business, 1999). However, one problem that the manufacturers of private labels have consistently been facing is that the private labels suffer from a lack of strong, quality image. These products are generally viewed to be of low and/or inconsistent quality. One obvious way to overcome this obstacle would be to invest heavily in developing and promoting a strong brand image. However, this is not a practical solution for private labels because either the manufacturers of these products do not have the resources or the costs cannot be justified because of limited distribution and/or low profit margins. One option that is available to some private label manufacturers is to use national brand ingredients and emphasize this association in their promotions. This way they can communicate a quality image without having to invest in the building of a brand image. Use of national brand ingredients can help private label producers by exploiting the brand equity, market goodwill, and brand associations of the national brand (Keller and Aaker, 1992). For example, in the context of bundled goods, Gaeth et al. (1990) find that inclusion of a favorably evaluated, high quality product improves evaluation of the bundle. If we consider a product to be a bundle of attributes, then adding a national brand ingredient definitely increases the average evaluation of that bundle. In this sense, ingredient branding is expected to work in favor of the private label product.

Increased sales

As far as the national brand (which provides the ingredient) is concerned, it may also tend to benefit from such an association (or at least not be adversely affected by it). One clear advantage is an instant sales increase resulting from derived demand for the alliance product. This could also lead to cost savings because of economies of scale that may result from such an increase in demand. What is not clear is the impact on the image of the national brand because of this association. If the impact is negative, it may negate all the gains that will otherwise accrue to the national brand. On the other hand, if there is no significant negative impact on the image of the national brand, the managers of national brands should actively seek such ingredient alliances. Theory and model development A number of theoretical models and concepts from a variety of disciplines have been used in the brand management literature to understand and explain various aspects of brand extensions and alliances. In this section, we draw on

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a number of these theories to derive and support our model. Specifically, we build a model of ingredient branding that examines the impact of brand alliance (of a private label product and a national brand ingredient) on the image of both the private label product and the national brand ingredient. For ease of conceptualizing, we use ``generic cereal'' and ``SunMaid raisins'' as examples of a private label product with a national brand ingredient, respectively. We will call such a product an `àlliance product.'' Concept specialization model

Attitude to alliance product

Concept combination theory and ingredient branding Brand alliances can be understood using concept combination theory (as proposed by Park et al., 1996). The two models proposed under this theory are the selective modification model and the concept specialization model. The concept specialization model (Cohen and Murphy, 1984; Murphy, 1988) can be applied to ingredient branding as it involves noun-noun conjunction (generic cereal with SunMaid raisins). Under this model, the combination of an ingredient brand with a generic product is similar to the process of a nested or `ìdiomatic'' concept formation. This process explains the formation of a composite concept by combining a nesting concept and a nested concept. A nesting concept has less variability on the attribute under examination than the nested concept. In the example of a generic cereal with Sun Maid raisins, the SunMaid raisins will be a nesting concept because it has lower variability in quality and the generic cereal will be a nested concept because of greater expected variance in quality (cf. Schmidt and Dube, 1992). A composite concept formed in such a manner permits only a one-way transfer of affect, from nesting concept to the nested concept, and not the other way around. Thus, based on this theory, we will expect to see a positive transfer of affect from SunMaid raisins to generic cereal, but the negative effect, if any, from the cereal to SunMaid raisins will not be significant. This is consistent with the findings reported in the literature, although in a slightly different context of brand extensions. Keller and Aaker (1992) reported no negative impact on the established brand when the extension was declared to be unsuccessful. Similar results were reported by Romeo (1991). Attitude accessibility theory and ingredient branding The attitude accessibility theory (Fazio, 1986) can also be used to understand how ingredient branding can influence attitudes toward the alliance product as well as the national brand. According to this theory, individuals are more likely to access attitudes related to a brand that are more salient or accessible. Also, they will bias subsequent information processing in the direction of the valence of such attitudes. Thus, in the context of ingredient branding where the national brand has a clear advantage both in terms of salience and accessibility of brand-related attitudes, attitudes towards the national brand are expected to influence positively the attitude towards the alliance product. Thus the alliance product is expected to be viewed more positively with national brand ingredient branding than without it. On the other hand, attitudes toward the private label brand will be relatively non-salient and hence will not be revoked. Thus, we will not expect any adverse impact on attitudes toward the national brand ingredient as a consequence of such an alliance. This expectation is consistent with the findings of Simonin and Ruth (1998, p. 39) that the ``better-known brand still might have an incentive to pair with less-known brands as long as the attitudes towards the partners and the perception of brand fit are not detrimental''.


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The subtyping model and ingredient branding The subtyping model of schema modification proposed by Weber and Crocker (1983) posits that atypical extensions are likely to be considered as exceptions and therefore be classified as subtypes, with each subtype being associated with a separate set of beliefs and attitudes. Thus, when generic cereal uses SunMaid raisins, the alliance product will likely be subtyped separately from the raisins and hence will be evaluated separately. This will minimize any harmful affect transfer from the cereal brand to the raisin brand. On the other hand, however, it is still very likely that the national brand raisins will have a positive impact on cereal's evaluation, as the two are inseparable in the alliance product. Thus, the alliance products still stands to benefit from the association without having any adverse impact on the national brand's image. Favorable evaluation

Consensus

``Product fit'' has frequently been cited as a determinant of consumer attitude towards a brand extension (Dacin and Smith, 1994; Park et al., 1991). Consumers prefer a fit in case of extensions as a good fit ensures easy transferability of the organization's skills from the original to extension products. In the context of ingredient branding, there is bound to be a good fit (and extension relevance) between the national brand and the private label products as the national brand product forms an important ingredient of the private label product. Thus the alliance product is bound to be evaluated favorably by consumers. On the other hand, the alliance is not likely to hurt the ingredient national brand, as this brand is not evaluated in conjunction with the store brand outside the context of the alliance. For example, when buying raisins, a consumer can evaluate SunMaid raisins without having to recall the alliance product. This is different from how the alliance product will be evaluated. The consumer does not have the option of evaluating the cereal and raisins separately as they get integrated in the alliance product. Thus, whereas in a typical bundling scenario a national brand runs the risk of getting ``hurt'' by a private brand companion (Yadav, 1994), the chances of such a negative evaluation of the national brand are minimal when it is evaluated outside the bundling context. This can also be understood from an attribution theory aspect, which is discussed next. Attribution theory and ingredient branding Attribution theory (Heider, 1958; Kelley, 1973) suggests that causal inferences are often based on consensus and consistency of information (Bettman, 1979). For example, high consensus (brand disliked by most consumers) is attributed to the brand and low consensus (brand disliked by only a few consumers) is attributed to the consumer (Folkes and Kotsos, 1986). In the context of ingredient branding, it is presumed that the national brand ingredient is perceived to have a better image than the private label brand. Although consumers are unlikely to have information on whether a brand is ``liked'' or ``disliked'' by other consumers, it is reasonable to assume that they can make inferences about the popularity of a brand from its familiarity. That is, a national brand could be perceived as having ``low consensus'' (disliked by few consumers) and a private brand could be viewed as having ``higher consensus'' (disliked by more consumers). Thus extending the consensus-consistency argument, it can be argued that in the event of an unfavorable evaluation of the alliance product, more blame is likely to be placed on the private brand than on the national brand. Based on the above discussion, we propose that ingredient branding is likely to benefit the private label product without having any adverse effect on the ingredient national brand. We propose to assess this effect on two important

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dimensions ± attitude towards the product and quality perception of the product. These two dimensions are important from a managerial standpoint as they effect the likelihood of purchase and consumption satisfaction. The proposed model is illustrated in Figure 1. We propose to test empirically the following hypotheses: H1: Attitude towards an unfamiliar private brand product with a familiar national brand ingredient will be more favorable than that towards an unfamiliar private brand product with an unbranded ingredient. H2: Quality perceptions of an unfamiliar private brand product with a familiar national brand ingredient will be more favorable than that of an unfamiliar private brand product with an unbranded ingredient. H3: Attitude towards a familiar national brand name (ingredient) will not be unfavorably affected by an association with an unfamiliar private brand product. H4: Quality perceptions of a familiar national brand name (ingredient) will not be unfavorably affected by an association with an unfamiliar private brand product. Changes in value perceptions

In addition to testing these four hypotheses, we also wanted to do an exploratory examination of the changes in value perceptions for the products involved. Specifically, we were interested in finding out if the association with a private label product affects, in any significant manner, the perceived value of the national brand. If it does, then the question is whether this effect is mediated by the value-consciousness of consumers. Additional information was collected to answer these questions. Method Data were collected from several sources. A major segment of the sample was students at two mid-western universities (175 subjects). A table was set up at a public place and volunteers were solicited to participate in the study. Some of the data also came from an evening language class at one of the universities (11 subjects). Finally, a small segment of respondents were solicited through a random mall interception process at a city mall (67 subjects). The total sample consisted of 253 subjects, of which 127 were females. The average age of the sample was approximately 28 years.

Figure 1. Model of expected effects JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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Questionnaires

Procedure On agreeing to participate, the subjects were handed a questionnaire booklet that asked them to evaluate two grocery products: cold breakfast cereal and raisins. The products were chosen on the basis that private brands were relatively common for breakfast cereals and it allowed for a convenient pairing between a nationally branded product (SunMaid raisins) as an ingredient in an unfamiliar private label product (Heartland Raisin Bran Cereal). It was also a product with which most people (including students) had at least some experience. The brand chosen for the private label product was one that was unfamiliar to participants, as we did not want prior perceptions or experience with the target product to confound the effect of our manipulation. Raisins were chosen as the cereal ingredient solely because there are few, if any, other choices where a national brand name product can be used as an ingredient in a cereal. In the first section, subjects were presented with an image of a box of Heartland Raisin Bran cereal which they were explicitly told was `à private label breakfast cereal that is produced by a small mid-western breakfast cereal manufacturer.'' After measuring consumer evaluations of the cereal (attitude towards the cereal and cereal's quality perceptions), they were next presented with the image of a bag of SunMaid raisins. Subjects were asked to evaluate the product (attitude towards the raisins and raisins' quality perceptions). Subjects were also asked questions related to value perceptions for each product and their value consciousness before being asked some demographic questions. Each participant was provided with one of two versions of the experimental booklet. The booklets were identical except for the first visual stimulus (the breakfast cereal). The second visual stimulus (SunMaid raisins) was identical in both versions of the booklet. Each of these stimuli are briefly described next.

Different visual stimuli

Breakfast cereal stimulus ± version 1. The stimulus consisted of a picture of a cold breakfast cereal package ``Heartland Raisin Bran'' with a promotional signal ``NOW WITH'' above a small picture of a SunMaid raisin package, thereby, drawing attention to the fact that the raisin ingredient used in the cereal was SunMaid raisins. A price of $1.99 for the 20-ounce box of cereal was added to make the stimulus complete. The price was based on visits to area grocery stores over a two-week period where comparable cereals' (national brands and private-brand brands) prices were recorded. Breakfast cereal stimulus ± version 2. The other version of the stimulus was identical to version 1 except for the fact it made no mention of any branded raisin ingredient. The price and quantity information was identical to the first version of the stimulus. SunMaid raisins stimulus. This stimulus consisted of a picture of a SunMaid raisin package. A price of $1.49 for a 15-ounce box was provided. This price was also based on the actual price of a 15-ounce box of SunMaid raisins recorded at local grocery stores over a period of time. Measures Product attitude. A ten-item, seven-point bipolar adjective scale was used to measure respondent attitude towards each of the two products after exposure to each stimulus. The adjectives were selected from previous attitude studies and from Osgood et al.'s (1957) book on semantic differential scales. Only items appropriate to grocery products were included. Reliability (coefficient alpha) for the scale was excellent (above 0.90).

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Quality perceptions. A five-item, seven-point summated rating scale based on Dodds et al.'s (1991) quality scale was used to measure quality perceptions of the two products. The items were slightly modified to make them appropriate for grocery products. For example, the original scale used adjectives like ``dependable'', ``durable'', and ``reliable''. The inappropriate adjectives were replaced with adjectives appropriate for a grocery product. The coefficient alphas for this scale ranged from 0.82 for the cereal to 0.78 for the raisins. Value perceptions. A six-item, seven-point summated ratings scale developed by Petroshius and Monroe (1987) was used. Coefficient alphas ranged from 0.75 for the cereal to 0.86 for the raisins. Value consciousness. A seven-item, seven-point scale for value consciousness developed by Lichtenstein et al. (1990) was used to measure value consciousness. The coefficient alpha for this scale was a respectable 0.84. All the seven-point scales had points ranging from 1 to 7.

Effectiveness of manipulation

Results Manipulation check A manipulation check was used to check the effectiveness of the ``branded ingredient'' manipulation. All subjects were asked at the end of the questionnaire if the cereal they had evaluated mentioned any specific brand of raisins. If so, they were asked to recall the brand of the ingredient. Of the respondents who saw the cereal stimulus with the SunMaid raisin ingredient, 88 percent recalled that the private-brand cereal did use a branded raisin ingredient. A total of 97 percent of these subjects correctly recalled the brand of ingredient as SunMaid. Of the respondents exposed to the cereal without a branded ingredient, 85 percent did not recall a brand name for the raisins in the cereal. The manipulation, therefore, was effective. Hypotheses 1 and 2 The first two hypotheses stated that the respondents' evaluations (attitude towards the product and quality perceptions) of an unfamiliar private-brand product (Heartland Raisin Bran cold breakfast cereal) will be more positive if it uses a nationally branded ingredient (SunMaid raisins). The hypotheses were tested both simultaneously and separately. H1 and H2 were first simultaneously tested using a multivariate analysis of variance (MANOVA) test, which is an appropriate statistical technique when two or more related dependent variables exist. The results were statistically significant (Wilks' Lambda = 0.926527; Rao R Form 2 (3,241) = 6.370403; Pillai-Bartlett Trace = 0.073473; p = 0.000359). To analyze further the significance of each dependent variable, t-tests were used to determine if the means of the respondents' evaluations were significantly different between the Heartland Raisin Bran cold breakfast cereal with SunMaid raisins and Heartland Raisin Bran without any mention of a raisin ingredient. The results showed that respondents' product attitude and quality perceptions were significantly more positive (p < 0.001) when Heartland Raisin Bran used SunMaid raisins as an ingredient, thus supporting Hypotheses 1 and 2. These results are presented in Table I. Hypothesis 3 and 4 These two hypotheses stated that the respondents' evaluation (attitude towards the product and quality perceptions) of a familiar brand name product (SunMaid raisins) would not diminish if the brand name's product


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Dependent variable

Cell mean

Product attitude Cereal with branded ingredient Cereal without branded ingredient

p-value

Comment

4.7499 4.3572

0.00065

H1 supported

Quality perceptions Cereal with branded ingredient Cereal without branded ingredient

4.9575 4.5237

0.00018

H2 supported

Exploratory study Value perceptions Cereal with branded ingredient Cereal without branded ingredient

5.3976 5.4364

0.7289

No difference

Table I. Cell means for evaluations of breakfast cereal

(raisins) was used as an ingredient in an unfamiliar private-brand product (Heartland Raisin Bran cold breakfast cereal). The MANOVA test, as hypothesized, was not statistically significant (Wilks' Lambda = 0.976316; Rao R Form 2 (3,238) = 1.924486; Pillai-Bartlett Trace = 0.023684; p = 0.126). Hypotheses 3 and 4 were, therefore, also supported. Differences for dependent variables

Separate ScheffeÂ tests were used to examine differences in means for each dependent variable. The results showed that respondents' product attitude and quality perceptions of SunMaid raisins after being exposed to the private label cereal with the SunMaid raisins as an ingredient were not significantly different (p > 0.10) from the evaluation of SunMaid raisins after exposure to the cereal without any branded ingredient. The cell means for consumer evaluations of the branded product are presented in Table II. Value perceptions The exploratory part of our study produced a couple of interesting and counter-intuitive results. First, respondents did not perceive any significant differences in the value perceptions between the cereal with SunMaid raisins and one without it (p = 0.73). One would have expected that the cereal with Dependent variable

Cell mean

p-value

Comment

Product attitude After exposure to cereal with branded ingredient 5.7029 0.5765 H3 supported After exposure to cereal without branded ingredient 5.6287 Difference = 7.419E-02; Confidence interval ± lower: ±0.1871, upper: 0.3355 Quality perceptions After exposure to cereal with branded ingredient 5.7512 0.1956 H4 supported After exposure to cereal without branded ingredient 5.6000 Difference = 0.1618; Confidence interval ± lower: ±6.10E-02, upper: 0.3845 Exploratory study Value perceptions After exposure to cereal with branded ingredient 4.8740 0.0225 Significant After exposure to cereal without branded ingredient 4.5754 Difference

Table II. Cell means for evaluations of SunMaid raisins 222


SunMaid raisins to be valued more as the price was kept constant over the two offerings. In a post-hoc sense, this counter-intuitive result is consistent with the findings of Petroshius and Monroe (1987) that the sacrificial dimension of price remains the major influence on responses to price. Consumer responses to price could have overwhelmed the effect on value perceptions. In a similar vein, Lichtenstein et al. (1990, p. 56) note, ``. . . though a consumer recognizes one brand as offering the highest ratio of quality to price, it may not necessarily be the best value for the particular consumer. The quality of the product may exceed the consumer's specific quality requirements. Therefore, the highest value for the particular consumer is viewed as the lowest priced product that meets his or her specific quality requirements.'' In this study, the low price may have, in effect, maximized value for all subjects and small differences at the high end of ``value'' were not influenced by the manipulation. Effects of private brand association

The second, and more interesting finding relates to the value perceptions of the national brand (SunMaid raisins). Subjects who were exposed to the private brand cereal with SunMaid raisins as an ingredient had a more positive perception of value of the SunMaid raisins. That is, the association with a private brand helped, rather than hurt, the evaluations of the national brand raisins. In other words, after the association with the private brand of cereal, subjects perceived SunMaid raisins as offering better value. Again, a post hoc analysis seemed to provide a reasonable explanation. It is possible that respondents who were particularly value conscious transferred some of their affect from the private brand cereal to the SunMaid raisins. That is, given that perceptions of SunMaid raisin quality remain unaffected, the fact that the high quality SunMaid raisins were associated with a private label cereal may have influenced how value conscious consumers viewed the price of the raisins. This explanation would suggest that only subjects who are high in value consciousness would perceive the SunMaid raisins as being a better value after seeing it associated with the private brand cereal. To test this, a median split was used to divide the sample into low and high value consciousness subjects. In the high value consciousness group, as expected, value perceptions of SunMaid raisins after exposure to the co-branded cereal were significantly higher than value perceptions of SunMaid raisins after exposure to the private brand cereal with no branded ingredient (4.99 vs 4.54; p = 0.02). On the other hand, in the low value consciousness group, there was no statistically significant difference in value perceptions irrespective of whether subjects saw the cereal with the branded ingredient or not (4.78 vs 4.56; p = 0.24). It appears, therefore, that a national brand's association with a private label can actually help perceptions of the national brand among value conscious consumers. Discussion and conclusion This study has empirically shown that the association of brand name ingredients with private-brand products can have a positive impact on consumer evaluations of an unfamiliar product. Respondents' quality perception and attitude toward a private-brand raisin bran cereal was significantly more positive when a brand name ingredient was used in it and highlighted on the product's packaging. There seems to be, therefore, significant benefits to private label brands in seeking out alliances with national brands for ingredients. It was also shown that the use of a brand name product (SunMaid raisins) as an ingredient in a private-brand cereal (Heartland Raisin Bran) will not negatively affect consumer evaluations of the branded product. The results


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show that respondents' quality perception and attitude toward the product did not change after the brand name product was associated as an ingredient in the private-brand product. In fact, among value conscious consumers, the association with a private label product actually enhanced value perceptions of the nationally branded product. Therefore, manufacturers of branded products may want to consider seriously strategic alliances with privatebrand products to increase their sales volume and participation in the private label market. Additionally, it may help them reach value conscious consumers even for their own nationally branded product. The lack of significant negative effects on the national brand is particularly encouraging given that in this artificial setting subjects evaluated the nationally branded product immediately after exposure to the co-branded product. It is therefore even less likely in ``real world'' conditions that exposure to the co-branded product would result in significantly negative affect towards the national brand. The artificiality of the situation may, however, have overstated the enhanced value perceptions of the nationally branded product. Limitations of the study

Although the results of this study are encouraging for both the national brand managers as well as private label managers, as is true in all research, there are some limitations that may limit the generalizability of the results. First, the private-brand name given to the cold breakfast was fictitious. This was intended to eliminate the effect of prior (possibly negative) experiences. In reality, an existing private-brand product combined with a branded ingredient may not have as significant results because of consumers' past negative experiences, if any. Second, the majority of the data was obtained through college students with the remainder of the data obtained through mall shoppers. This was acceptable for preliminary theory testing, but additional testing using a truly random sample is required prior to making broad generalizations about the market effectiveness of such brand alliances. Finally, raisins were used as the ingredient manipulation because there are very few widely known national brand name raisin products and few options for ingredients in cold breakfast cereal products. Using raisins as the ingredient in the study may have created a conflict with respondents who did not like or eat raisins. Even though respondents' evaluations were to be based on the visual stimuli, their feelings of dislike for raisins may have biased their evaluations.

An important consideration

From a managerial point of view, an important consideration is the price of the private label product with the branded ingredient. The situation examined in this study assumes that a strategic alliance between a private label manufacturer and a national brand manufacturer does not result in a significant increase in price of the co-branded product. If such alliances naturally result in a price increase, a significant portion of the advantage of ``private labels'' may be lost. As long as consumers continue to perceive the private label product (with the branded ingredient) as being lower priced, there is an advantage to both parties involved in the alliance. Intel spends a great deal of money building its brand equity even though the product is essentially an ingredient in a variety of products ranging from no-name desktops to high-end Compaqs (a strong brand in its own right). This model is likely to be adopted in an increasing number of product categories as manufacturers look for ways to participate in the growth of private label products. Directions for future research The results of this research provide direction and insight to those who see potential advantages and future gains through the partnership of private brand and national brand products. This research has explored the potential

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for strategic brand alliances that have hitherto been ignored. Prior research on brand alliances has tended to focus on alliances between two national brands (e.g. Intel inside a Compaq). This effort provides an interesting first look at the possibilities of alliances between national and private brands alliances that are gaining a foothold in the industry. There are several possibilities for additional research on private brand/national brand alliances with attention being placed on different commodities and brands, such as, frozen foods, health and beauty aids, electronics, etc. Greater attention also needs to be placed on the potential risks associated with private brand and national brand alliances for all parties involved. Additionally, the findings reported here make additional research on the boundary conditions of the branding effect worthwhile. Also, given that a great deal of ingredient branding takes place in the grocery industry, it would be interesting to see whether the effect holds up under varying levels of involvement, product knowledge, and product usage. Development of theory

Importantly, while this study examined the potential for both parties in an ingredient branding alliance to benefit, it did not examine the process by which affect transfer could occur. Although several theories were presented that led up to the hypotheses tested in this study, the field could benefit from further theory development on which processes most affect consumer evaluations of such co-branded products. It should be pointed out that the hypotheses examined here were based on an analysis of the research literature on branding and consumer information processing, but a clearly defined model of all the effects was beyond the scope of this paper. The unexpected findings in this paper regarding the ``value'' measure point to the potential for developing a clear framework of the process by which various cues may influence consumer perceptions of the brands involved in the alliance. In this study, respondents' evaluations were measured immediately after viewing the visual stimulus. A longitudinal study of respondents' evaluations may provide additional insight into a private brand and national brand alliance. For example, over a period of time, consumers may become immune to the fact that a brand name ingredient is present in a private brand cereal and the benefit of `àffect transfer'' could diminish over time.

Future research

Finally, another interesting idea for future research would be to examine the impact of ingredient branding on actual taste perceptions of the combined brand. In their study of ingredient branding, McCarthy and Norris (1999) found that knowing the brand of an ingredient affected subjects' overall taste perceptions as well as taste perceptions of the branded ingredient. They also studied the interesting issue of whether varying levels of ``brand strength'' would affect the ability of brands to benefit from such alliances. References Aaker, D. (1996), Building Strong Brands, The Free Press, New York, NY. Aaker, D.A. and Keller. K.L. (1990), ``Consumer evaluations of brand extensions'', Journal of Marketing, Vol. 54, January, pp. 27-41. Bettman, J.R. (1979), An Information Processing Theory of Consumer Choice, AddisonWesley, Reading, MA. Cohen, B. and Murphy. G.L. (1984), ``Models of concepts'', Cognitive Science, Vol. 8 No. 1, pp. 27-58. Dacin, P.A. and Smith, D.C. (1994), ``The effect of brand portfolio characteristics on consumer evaluations of brand extensions'', Journal of Marketing Research, Vol. 31, May, pp. 229-42.


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Dodds, W.B., Monroe, K.B. and Dhruv, G. (1991), `Èffects of price, brand and store information on buyers' product evaluations'', Journal of Marketing Research, Vol. 28, August, pp. 307-19. Fazio, R.H. (1986), ``How do attitudes guide behavior?'', in Sorrentino, R.M. and Higgins, E.T. (Eds), The Handbook of Motivation and Cognition: Foundations for Social Behavior, Guilford Press, New York, NY. Folkes, V.S. and Kotsos, B. (1986), ``Buyers' and sellers' explanations for product failures: who done it'', Journal of Marketing, Vol. 50, April, pp. 74-80. Gaeth, G.J., Levin, I.P., Chakraborty, G. and Levin, A.M. (1990), ``Consumer evaluations of multi-product bundles: an information integration analysis'', Marketing Letters, Vol. 2 No. 1, pp. 47-57. Heider, F. (1958), The Psychology of Interpersonal Relations, Wiley, New York, NY. Keller, K.L. and Aaker, D.A. (1992), ``The effects of sequential introduction of brand extensions'', Journal of Marketing Research, Vol. 29, February, pp. 35-40. Kelley, H.H. (1973), ``The process of causal attribution'', American Psychologist, Vol. 28, February, pp. 107-28. Lichtenstein, D.R., Netemeyer, R.G. and Burton, S. (1990), ``Distinguishing coupon proneness from value consciousness: an acquisition-transaction utility theory perspective'', Journal of Marketing, Vol. 54, July, pp. 54-67. Low, G.S. and Fullerton, R.A. (1994), ``Brands, brand management, and the brand manager system: a critical-historical evaluation'', Journal of Marketing Research, Vol. 31, May, pp. 173-90. McCarthy, M.S. and Norris, D.G. (1999), `Ìmproving competitive position using branded ingredients'', Journal of Product and Brand Management, Vol. 8 No. 4, pp. 267-85. Murphy, G.L. (1988), ``Comprehending complex concepts'', Cognitive Science, Vol. 12 No. 4, pp. 529-62. Narasimhan, C. (1999), ``The new appeal of private brands'', Harvard Business Review, May/ June, p. 41. Osgood, C.E., Suci, G.J. and Tannenbaum, P.H. (1957), The Measurement of Meaning, University of Illinois Press, Urbana, IL. Park, C.W., Jun, S.Y. and Schocker, A. (1996), ``Composite branding alliances: an investigation of extension and feedback effects'', Journal of Market Research, Vol. 38, November, pp. 453-66. Park, C.W., Milberg, S. and Lawson, R. (1991), `Èvaluation of brand extensions: the role of product level similarity and brand concept consistency'', Journal of Consumer Research, Vol. 18, September, pp. 185-95. Petroshius, S.M. and Monroe, K.B. (1987), `Èffect of product-line pricing characteristics on product evaluations'', Journal of Consumer Research, Vol. 13, March, pp. 511-19. Reddy, S.K., Holak, S.L. and Bhat, S. (1994), ``To extend or not to extend: success determinants of brand extensions'', Journal of Marketing Research, Vol. 31, May, pp. 243-62. Romeo, J.B. (1991), ``The effect of negative information on the evaluations of brand extensions and the family brand'', in Holman, R.H. and Solomon, M.R. (Eds), Advances in Consumer Research, Vol. 18, Association for Consumer Research, Provo, UT, pp. 399-406. Schmidt, B.H. and Dube, L. (1992), ``Contextualized representations of brand extensions: are feature lists or frames the basic components of consumer cognition?'', Marketing Letters, Vol. 3 No. 2, pp. 115-26. Simonin, B.L. and Ruth, J.A. (1998), `Ìs a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes'', Journal of Marketing Research, Vol. 35, February, pp. 30-42. Supermarket Business (1999), ``Taking it private'', Supermarket Business, Vol. 54, October 15, p. 66. Weber, R. and Crocker, J. (1983), ``Cognitive processes in the revision of stereotypic beliefs'', Journal of Personality and Social Psychology, Vol. 45, November, pp. 961-77. Yadav, M.S. (1994), ``How buyers evaluate product bundles: a model of anchoring and adjustment'', Journal of Consumer Research, Vol. 21, September, pp. 342-53.

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This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present

Executive summary and implications for managers and executives Ingredient branding ± a good thing all round Although ingredient brands ± and other forms of ``joint branding'' ± have been around for many years, in recent times the ideas of the branded ingredient has loomed larger in the minds of practicing marketers. The promotions of two brands ± Intel and Nutrasweet ± are the main reason for this awareness. Both Intel's microprocessors and Nutrasweet's sugar substitute are not products that the ordinary consumer would buy in the normal round of purchases. But, in both cases, the ingredient was of great importance to the end product ± be it a computer or a soft drink. In highly competitive markets the opportunity to use a well-regarded and strong brand within the product improves the impression that is given by the host brand. The result has been that new products were introduced featuring branded ingredients and existing products began to promote that fact of containing a branded ingredient. Under such circumstances the issue for marketers becomes the effect of the ingredient brand on the overall brand image and the effect of the host brand on the image of the ingredient. Is there a down side to ingredient branding for the host? Vaidyanathan and Aggarwal investigate the implications of ingredient branding with the intention of discovering whether there are risks for the brands involved. And the authors' main focus in on the private label brand that incorporates an ingredient promoted as a national brand. From Vaidyanathan and Aggarwal's findings, we can see that (accepting the limitations of the research) there is not much of a down side to ingredient brands linking with the private label brand. In contrast, the private label brand has everything to gain from taking the ingredient branding route. Indeed, as Vaidyanathan and Aggarwal point out, it can be argued, ``. . . that repeated exposure to the (ingredient) brand over different products has the potential of reinforcing a brand name.'' Even where the ingredient brand is subject to standalone national advertising, the benefits of co-branding remain ± the marketer gets additional brand promotion at close to zero cost. For the host the only risks exist in the lack of control over the ingredient's brand image. The ingredient has to be a robust and trustworthy brand if this risk is to be minimised. A branded ingredient will enhance the image of the host brand but, if that brand suffers problems, there is the risk that the poor image of an ingredient may damage the host. This takes us to the benefits (and disbenefits) of co-branding for the ingredient brand. Won't a bad host damage the national ingredient brand? The answer, if Vaidyanathan and Aggarwal's research extends to other product areas, appears to be that there is very little risk of brand damage for the ingredient. Not only does the ingredient brand benefit from additional promotional exposure but also that ingredient brand remains unaffected by any negatives associated with the host brand. Indeed, when we think about the issue of ingredient branding, it does seem that there are few problems. We can see that it is what the host does with the ingredient that matters rather than the fact of the ingredient itself. The


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cookies with branded chocolate chips may be revolting (although I'm sure they're not!) but this is not the fault of the chips ± consumers can make this distinction. The only issue for the ingredient brand, therefore, is the degree of association with the host ± the extent to which the consumer links the ingredient brand to the host brand. For the ingredient brand owner, the message is that you gain so long as your brand is seen as an ingredient. If you reach the stage where your brand association becomes an endorsement of the host product then the relationship has changed and there may well be risks associated with the brand link. Some thoughts about private label brands In the USA private label brands ± brands associated with a particular retailer ± have an image of being lower quality when compared to national brands. However, there has been a gradual shift in this perception as private label brands take a bigger and bigger share of the market. We can compare this situation to that in the UK a decade or so ago when private label brands had the same image as we find in the USA. However, the UK example shows that it is possible for a mass market retailer to change the perception of its own label products by improving the retailer's image. The result is that, for some of the big UK supermarket chains ± and for retailers such as Marks & Spencer ± their own brands now have a similar quality image to many nationally branded products. While the products themselves may not have changed, the improved image of the supermarket itself has contributed to a perception that those own-branded items are the equal of national brands. Under such circumstances the ingredient brand takes on less significance since the private label can stand its ground against the manufacturer brands. Getting into the product becomes more of a challenge since these stronger brands have less need for the benefits that accrue from a branded ingredient. Whether the US market will behave like that in the UK is a matter for discussion ± the UK's supermarket sector has enjoyed advantages that enabled it to secure higher margins. Without doubt the lack of development land and severe planning constraints have acted to protect the UK's big supermarkets. Ingredient branding is here to stay and presents a great opportunity for both brands involved. For the ingredient brand the benefits come from enhanced image and wider promotion. For the host brand ± and especially the private label host ± the advantages lie in association with a trusted and powerful national brand. (A preÂcis of the article ``Strategic brand alliances: implications of ingredient branding for national and private label brands''. Supplied by Marketing Consultants for MCB University Press.)

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