Battle of the brands: Research finds branded components changing industry structures

Aug 19, 2009

Back in the day, planes, trains and automobiles all sported one brand name. If you bought a Boeing, you got, nose to tail, a Boeing. These days, however, complex industrial equipment is starting to look like NASCAR vehicles festooned with logos. Why does it matter? "When component brands become powerful it changes the industry," says George John, Marketing Department Chair at the University of Minnesota's Carlson School of Management. "What becomes more important, the product brand or the component? The Dodge truck or its Cummins engine?"

John and co-author Mrinal Ghosh (University of Arizona) investigate component branding in a forthcoming study in the . Various technologies that provide benefits like , higher download speeds and better safety ratings all arise from component branding. But the innovation that makes these products superior often doesn't come from the primary brand, it comes from the component brand. To assure the makers of component technologies that the partnership will endure for long enough to make their investment worthwhile, visible acknowledgments of the added benefit - and which company brought the consumer that added benefit - have become common.

On 30% of the industrial products in their sample, everyday users will see at least one brand displayed in addition to the primary brand. No longer are they using a Dell computer, they're using a Dell with Intel Inside. "The component brand name, right there on a product, is, in a way, insurance that the company won't be dropped for a newer, cheaper, competitor next year," says John. "The co-branding is enough of a deterrent that the product won't switch to a different supplier. This gives the component maker the ability to put effort and resources into developing the product," says John.

Beyond simple consumer curiosity, this shift to visibly branded components should be noted by policy makers and regulators. "When an industry changes from a vertical structure with dominant primary brands to a horizontal structure with dominant component brands, suppliers become more powerful. And if the industry is in trouble, who gets bailed out? Detroit Diesel or GM? Cummins or Dodge? The right answers must depend on a deep understanding of who offers the real value," notes John.

More information: More information on Professor John and a copy of the article can be found at www.carlsonschool.umn.edu/marketinginstitute/gjohn .

Source: University of Minnesota (news : web)

Explore further: Ultra high definition TVs boost LG Display profit

add to favorites email to friend print save as pdf

Related Stories

Brands picked for narcissistic reasons

Nov 14, 2005

French researchers say we pick certain brand names for an entirely narcissistic reason: they contain letters of the alphabet that are in our own name.

Branding is another headache for SBC, AT&T

Sep 03, 2005

As rumors fly that SBC plans to drop its brand and adopt AT&T's name when the two companies complete their merger, experts are mixed on whether or not they are doing the right thing. BusinessWeek Magazine is reporting thi ...

Brand ID: Is a car masculine or feminine?

Jul 19, 2005

Languages affect brand perception and the English and Spanish gender system presents specific problems, such as whether a car is masculine or feminine.

Trailblazers don't always come out ahead

Jan 23, 2008

It’s not always best to be first, finds a new study from the Journal of Consumer Research. Researchers from Purdue, Indiana University, and UConn examine how consumers will evaluate new products when they are released by an ...

Recommended for you

Ultra high definition TVs boost LG Display profit

11 hours ago

(AP)—LG Display Co. said profit for the April-June quarter more than doubled as a stronger won reduced the value of its foreign debt and the World Cup boosted demand for ultra-high-definition TVs.

Drugmaker GSK slashes annual profits forecast

11 hours ago

British drugmaker GlaxoSmithKline on Wednesday slashed its 2014 profits forecast as second-quarter earnings sank on the back of weak US trade, adverse currency moves and a Chinese bribery probe.

User comments : 0