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August 3, 2012

When the parts matter the most

Posted by Komal Jain (View Profile | View All Posts) at 6:25 AM

The computer industry has always tussled with the problem of forging a unique identity.  Semiconductor companies and other hardware component suppliers for consumer electronics typically lack a direct relationship with end customers.

Yet some companies have overcome this by ultimately bypassing the actual end product by marketing their innards.  Most industry pundits believe that Intel was the trendsetter, when they began their marketing campaign in PCs with the label "Intel Inside."  The message was that if you bought a computer with this label, you could trust the microprocessor, which most users vaguely knew was the brains of the machine.  Or at least as critical to the performance as the engine was in their car.   

We call this practice "ingredient branding," but the reality is that it has been around to a lesser degree and perhaps far longer with other products.  Gore Tex in clothing, NutraSweet in recipes, Teflon in cookware, Shimano gears on high-end bikes, are good examples of successful parts suppliers that have achieved a certain marketing status among end users.  Rayon and Lycra have become famous thanks to smart clothing manufacturers, and yet I'll wager that most people have no idea that DuPont, the giant chemical concern, invented them.  

Much of the ingredient marketing comes from large companies that are merely putting a huge effort in a new brand. But I think there is ample room for co-creation and partnerships where the quid pro quo is increased sales and prestige for everyone involved.  

There's no reason that co-creation and ingredient marketing can't find its way into the B2B space. For example, a leading semiconductor company can use social media and communities to co-create its next generation of microprocessors.  Beyond the few major consumer electronics manufacturers there are hundreds more smaller tech companies that have no more than 30 people in their shop.  Yet these companies - where unfettered, creative energy is often in the greatest supply -- will be the source for innovation, especially in emerging economies.  

Establishing these one-to-one relationships and incorporating the community into product development processes provides a competitive advantage and greater agility in penetrating new markets.

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