Evaluating marketplace synergies of ingredient brand alliances

This research examines the marketplace performance of ingredient brand alliances (IBAs). In this type of alliance, a component or feature of a primary or focal brand is branded using a secondary brand. Performance is affected by both the primary and secondary brands, each of which has functional and emotional associations. Drawing on concept combination theory, the authors examine congruent and incongruent effects in both associations as a means of achieving synergy in the brand. While the extant literature largely focuses on consumer perceptions of ingredient brand alliance products as an outcome, the authors examine the market share and revenues for 126 ingredient brand alliances in 49 product categories of consumer packaged goods over 14 years. A generalized estimation equation shows that, on average, each brand's associations have positive main effects on ingredient brand alliance performance. However, congruent associations (such as the perceived functional associations of both brands) attenuate these effects, while incongruent associations (the perceived functional association of one brand with the perceived emotional association of another) were not significant. The article concludes with a simulation showing that managers can do better by picking a partner brand whose associations are more incongruent, rather than merely what seems to be the strongest partner on both associations.