Take a moment and think about your favorite thing to eat. Perhaps it’s pizza. This incredible food is so simple combining dough, tomato sauce and cheese in its basic form. Once you start adding additional ingredients such as pepperoni, spinach, or anchovies the pizza takes on an entirely new flavor. These wonderful enhancements come with a cost, of course, and that $3 slice of pizza quickly inflates to $5.50 and it’s so worth it.
In the consumer space, an ingredient technology enhances a product’s benefits more than the product itself would have otherwise delivered.
What is an example of a consumer ingredient brand?
The most recognized ingredient brands are arguably the Intel computer chip and Gore-Tex waterproof technology. Here is a brief history lesson into the latter; Bob Gore is a chemical engineer who created a waterproof poly fiber, well, by accident.
During an experiment in 1969, Mr. Gore was conducting research with polymer polytetrafluoroethylene (PTFE), commonly known as Teflan, and while heating it to 300 degrees centigrade, he quickly pulled the material transforming it into an entirely new physical state. The result was the creation of an expanded material, or ePTFE, which is now commonly used in clothing, shoes, medical supplies, guitar strings, and thousands of other products across multiple sectors.
ePTFE is most widely known for its superior water proof fabric and when you see the Gore-Tex branded hang tag on a North Face jacket or pair of Nike shoes, the consumer understands they are getting a best-in-class waterproof technology and are more than willing to pay the premium for the guarantee they will stay dry.
Here are a few lesser known examples of ingredient brands who offer consumer products tremendous added value:
- BOA is a dial fit system used primarily in footwear. The technology replaces shoelaces and offers an advanced system of securing products (e.g. shoes, helmets) to your body. Oh and it’s also great for kids who don’t like to tie their shoes!
- PrimaLoft is a high-performance synthetic insulation and materials brand, which was recently acquired by private equity firm, Compass Diversified.
- Crash Cloud is an impact protection padding solution.
To elaborate on the latter, I am a Board Member at Windpact Inc. and the company has a proprietary impact protection ingredient technology called the Crash Cloud. In its simplest form, it is “foam in an airbag”, which disperses energy upon impact, reducing the force to the fragile human head. The value proposition provides a safer and more comfortable padding solution than commodity padding materials (e.g. polyurethane foam). The Crash Cloud is a technology primarily used in helmets and the ingredient brand has been integrated into EvoShield baseball catcher’s mask & helmet and will soon launch in a wide range of other types of helmets.
What are the benefits of an ingredient brand?
Ingredient brands provide subject matter expertise and are hyper-focused on one particular solution (e.g. waterproofing, recycling, safety). These companies have invested heavily into R&D, often in the tens of millions of dollars, with many years in dedicated research. Ingredient technologies also provide incredible marketing support to communicate the features and benefits of their products. Therefore, their branded partners can leverage these marketing assets to gain credibility to a particular solution and expand their reach to a broader audience. Ultimately, these brand collaborations establish trust, credibility, and create a superior product together beyond what it would produce alone.
Here is an elaborated list of the benefits:
- Eliminates up front R&D costs saving millions of dollars
- Speed-to-market
- Leverage subject matter expert marketing assets
- Gain credibility to solving a particular problem
- Expands your customer reach
- Provides a superior product to you customer
- Increases your AUR (average unit retail)
- Establishes a premium brand positioning
- Drives more sales to your standard product offering (more on this below)
- Creates a sense of urgency to buy-now (more on this below)
How do ingredient brands accelerate your growth?
When two brands collaborate it’s often called a capsule collection, or Limited Editions. This extended breadth of product offers a premium selection – icing on the cake, if you will – to your customer base. In other words, it gives them an additional reason to buy something from your brand and with a sense of urgency because it’s offered for only a limited time. This excitement can quickly give your sales a lift in revenue.
Secondly, while not all customers may be able to afford the premium product offering, it elevates the entire brand recognition driving more sales to your standard products. As the old restaurant hi-low strategy goes, offering a $59.99 T-bone steak will help you sell more $19.99 premium cheese burgers, which now sounds like a bargain. The same psychological tactic, whether intended or not, works with consumer products. While a North Face Gore-Tex jacket can command up to $650, they will ultimately sell more of the standard $495 jackets. That same $495 jacket now feels inexpensive to the customer who does not necessarily need a waterproof solution (i.e. In Southern California it rarely rains but gets very cold at night) when compared to the premium $650 version.
Leverage ingredient brands to beat the competition
If you are an executive or product developer at a consumer brand, I encourage you to review your product roadmap and determine how you can make your products better by solving an immediate problem with the integration of an ingredient technology. It will save you time, money, and accelerate your growth through this strategic partnership. This competitive edge will set you apart from the competition earning more customer loyalty and ultimately market share.
