Improving competitive position using branded ingredients

Abstract

Assesses how branded ingredients affect consumer product quality perceptions, confidence in product quality perceptions, product evaluations, taste perceptions, purchase likelihoods, and reservation prices of host brands of varying quality. In two experiments, we find that branded ingredients consistently and positively affected moderate‐quality host brands, but only occasionally positively affected higher‐quality host brands. Suggests that managers of both moderate and higher‐quality host brands consider implementing branded ingredient strategies, albeit for different reasons. While moderate‐quality host brands can improve their competitive position by using branded ingredients, higher‐quality host brands generally do not. However, higher‐quality host brands may benefit most by securing the most desirable branded ingredients for their own use, thereby blocking moderate‐quality host brands from using a branded ingredient strategy to improve their competitive position.