What is The Secret of Industrial High-Tech Startups That Succeed in Reaching for The Stars?
The InBranding Strategy
Overwhelmed by infobesity, the acceleration of scientific discoveries, the emergence of new technologies and therefore new products... a strong brand is a "reading key" for customers, users and consumers, even for industrial ones with BtoB business models.
Without this reading key, the clients cannot understand what is offered to him. He won't buy your offer or he will choose the one or your competitor.
High-tech startups proposing a new technology that must be integrated into a product assembled by another company can benefit enormously from the InBranding strategy also called "ingredient branding" or "component branding" strategy.
What is InBranding: the company that will integrate your technology into its product agrees to display your brand or the brand you have designated for your technology on the product.
Auto-In-Branding or Auto-Ingredient-Branding: when the finished product with its brand displays a brand of an ingredient or component, both belonging to the same company. The component or ingredient comes from the company's R&D. This strategy enables the company to promote its innovations to clients.
The InBrand strategy must be accompanied by operational and tactical multi-level marketing targeting the integrator, the integrator's client companies and the end users/consumers.
This approach can be very costly because each level requires an alignment of resources.
When resources are lacking (startups, SMEs), the tactic is to focus efforts on the end users/consumers with inbound (pull) and outbound (push) marketing powered by digital marketing - blogging, vlogging, Google/Facebook/Youtube Ads, social selling and webinars, email marketing, funnel marketing … -.
For a manufacturer company, the objective of InBranding is to gain bargaining power over its downstream BtoB integrator clients, thanks to end users/consumers demanding the product with the manufacturer's brand.
“I want a computer that has the "Intel Inside" label even though I don't understand what it is and how a processor works. A computer that has this label must necessarily be better than those without.” => The Dell integrator is forced to give in to demand and favour Intel processors over other manufacturers.
What are the best conditions for InBranding?
Complexity and importance of the component in the integration of the final product: the component integration needs specific know-how (expert skills) and is an essential element for the performance of the final product.
Competitive intensity (of component manufacturers): if the market is rich in competitors from the outset, an entry strategy by a new player through strong differentiation (InBranding) may not work because the decision of the integrator is based on prices (and the purchase decision of end consumers as well). It is difficult for a new entrant in fine chemicals to offer Colgate-Palmolive a very strong branded ingredient, the bargaining power is already largely in favour of Colgate-Palmolive (as an innovator but also as a brand integrator).
Competitive intensity of integrators: for a new component/ingredient (tech) company, if in the market, there are many integrator companies competing each other, this means each integrator could be willing to pay for a competitive advantage. By targeting the n°2 or n°3 in the market more open to the opportunity to beat the leader, you have a better chance of winning the whole market by imposing your Brand tp all the integrators.
Alternatively: if the integrators are recent companies in a niche market (BtoB or BtoC) but with high potential, the InBranding strategy for the component manufacturer would be a safe bet that is worth to be tested. The integrators have sniffed out a niche, therefore you can also benefit from their intuition and impose your brand to these new end consumers/users.
Bonus: if the component can be sold separately as a part, even better. Offering geeks the ability to buy your brand's microprocessor, internal hard drive, motherboard, RAM ... so that they can assemble their PC themselves is another way to nurture the attachment of users/consumers to your brand (Love-Brand).
Intel's InBranding Strategy
Intel convinced the integrators to stick its logo on the computers (in a location clearly visible to end customers) by bearing the cost of TV advertisements (co-branding).
For the integrator, this is a double bonus:
- Differentiate from other computer manufacturer brands
- Get free TV advertising
Intel creates demand with end users (homes and businesses). People do not know what this thing is for but have the perception that their computer will be better if it is equipped with this Intel thing!
Other computer manufactuers come and knock at Intel's door to integrate the Intel microprocessor into their computers. Intel imposes its brand policy on all its new customers.
The negotiation power ends to be in favour of Intel favour. Intel becomes the market leader in microprocessors and imposes its (high) prices. A computer manufacturer that chooses another microprocessor manufacturer (unknown but less expensive) takes the risk of being perceived by its end customers as Cheap (low-end, lower quality)!
Intel no longer needs to advertise in co-branding, and its advertisements show only its logo!
InBranding for an entire economic sector
The French/European labels such as Bio, Label Rouge, Our regions have talent (brand of the distributor E.Leclerc), Reflets de France (brand of the supermarket Carrefour), the AOC and AOP (state brands) … are InBranding for entire sectors here of the food industry … or even the labels Made in France, Made in USA, Made in China ... are InBranding for an entire Nation.
Today, integrator companies know the InBranding strategy of their component or ingredient suppliers. It's a subtle tango that must be danced to maintain a beautiful win-win symbiosis... without forgetting that there is always a risk of ending up completely eaten from the inside.
E² - Épistémê Entrepreneur