An executive summary for
managers and executive
readers can be found at the
end of this article
Important imformational
role of brands
214 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000, pp. 214-228, # MCB UNIVERSITY PRESS, 1061-0421
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.
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
 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 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,

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 branding

Growth of private brands 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

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


Concept specialization
model
Attitude to alliance product
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''.
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.
Favorable evaluation ``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

Consensus 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

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.
Changes in value In addition to testing these four hypotheses, we also wanted to do an
perceptions 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 219

 Procedure
Questionnaires 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.
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).

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.

Results
Manipulation check
Effectiveness of A manipulation check was used to check the effectiveness of the ``branded
manipulation 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

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

 Cell
Dependent variable 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

(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 Separate Scheffe tests were used to examine differences in means for each
variables 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

Cell
Dependent variable 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 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000


Effects of private brand
association
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 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
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.
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 From a managerial point of view, an important consideration is the price of
consideration 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

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


Development of theory
Future research
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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 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
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 4 2000
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
227
 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.)

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