Strategic brand alliances:implications of ingredientbranding for national andprivate label brandsRajiv VaidyanathanAssociate Professor of Marketing, University of Minnesota, Duluth,Minnesota, USA

Praveen AggarwalAssistant 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 alliancesbetween two known, national brands. However, there is significant benefit to both partiesin an alliance between a national brand and a private brand. Such alliances are gainingimportance in the industry but have not been studied by marketers. The basic questionexplored in this study is whether using a national brand ingredient can benefit a privatebrand without hurting the national brand. First, a theoretical framework to explain howconsumers may react to such an alliance is presented. Next, an experiment was conductedwhich showed that a private brand with a name brand ingredient was evaluated morepositively. However, the evaluation of the national brand was not diminished by thisassociation. Implications and future research directions are discussed.

IntroductionBrands 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 current issue and full text archive of this journal is available at

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The authors would like to sincerely thank Mark G. Brown, Project Manager at ThePillsbury Company, for his significant contribution to the development of and datacollection for this project. He was a graduate student at the University of Minnesotawhen this study was conducted.

Important imformationalrole of brands

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An executive summary formanagers and executivereaders can be found at theend of this article

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 Nestle 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 extensionsBrand 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.

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,

No new product

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 215

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

`̀ extended'' 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.

Private brands and ingredient brandingSales 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.

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 developmentA 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

Growth of private brands

Increased sales

216 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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 `̀ 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 `̀ idiomatic'' 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''.

Concept specializationmodel

Attitude to alliance product

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 217

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.

`̀ 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

Favorable evaluation

Consensus

218 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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.

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.

MethodData 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

Changes in valueperceptions

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 219

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 `̀ a 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.

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).

Questionnaires

Different visual stimuli

220 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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.

ResultsManipulation 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

Effectiveness ofmanipulation

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 221

(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.

Separate Scheffe 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

Cereal with branded ingredient 4.7499 0.00065 H1 supported

Cereal without branded ingredient 4.3572

Quality perceptions

Cereal with branded ingredient 4.9575 0.00018 H2 supported

Cereal without branded ingredient 4.5237

Exploratory study

Value perceptions

Cereal with branded ingredient 5.3976 0.7289 No difference

Cereal without branded ingredient 5.4364

Table I. Cell means for evaluations of breakfast cereal

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

Differences for dependentvariables

222 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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.

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 conclusionThis 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

Effects of private brandassociation

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 223

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 private-

brand 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.

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.

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 researchThe 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

Limitations of the study

An importantconsideration

224 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000

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.

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 `̀ affect transfer'' could diminish over time.

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.

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&

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Executive summary and implications for managers andexecutives

Ingredient branding ± a good thing all roundAlthough 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

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000 227

This summary has beenprovided to allow managersand executives a rapidappreciation of the contentof this article. Those with aparticular interest in thetopic covered may then readthe article in toto to takeadvantage of the morecomprehensive descriptionof the research undertakenand its results to get the fullbenefit of the materialpresent

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 brandsIn 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 MarketingConsultants for MCB University Press.)

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