Component suppliers with unknown brands: why are they able to enter successful ingredient branding agreements?

While several studies have recently demonstrated that branding principles can be successfully extended from B2C markets to the B2B domain (e.g. Cassia & Magno, 2012; Veloutsou & Taylor, 2012), knowledge about available branding strategies in B2B markets, and in particular about ingredient branding (Ghosh e John, 2009), is still limited. Available studies on ingredient branding (the co-branding strategy according to which the ingredient brand is associated to the brand of the end product) seem to suggest that the most recurrent way followed by ingredient suppliers to start an ingredient branding strategy, is investing heavily to create a sufficient level of brand awareness among consumers (Norris, 1993; Norris, 1993; Venkatesh e Mahajan, 1997; McCarthy e Norris, 1999; Vaidyanathan e Aggarwal, 2000; Desai e Keller, 2002). Such awareness would then force or at least motivate the OEM to incorporate the branded ingredient in his product. Nonetheless in several B2B industries it is not rare to find some ingredients’ producers that, despite lacking the resources to invest in brand-building activities, were nonetheless able to enter ingredient branding agreements with well-known OEMs. The purpose of this paper is to solve this apparent inconsistency between available studies and real-world business practice, by identifying the factors that explain the feasibility and the success of ingredient branding agreements, involving an unknown component supplier and a well-known OEM.