Service inside: The impact of ingredient service branding on quality perceptions and behavioral intentions

• We investigate the potential of services as ingredient brands where past research has focused on tangible products.
• We concentrate on industrial buyers to detect how ingredient service brands impact customer preferences on B2B markets.
• In an experiment, we find a positive effect of ingredient service brands on buyers' perception of the end product's quality.
• The effect is stronger when quality of the host brand is lower.
• Ingredient service brands provide a cue to product quality of the end product, indirectly improving purchase intentions.

Extant literature on ingredient branding is directed at tangible products but does not account for the role of services as ingredients. For B2B suppliers, however, service is emerging as the dominant route to achieving competitive advantage. The purpose of this research is to investigate how ingredient service brands impact customer preferences on B2B markets. We specifically assess how ingredients might impact industrial buyers' quality perceptions of the end product. By conducting a within-subjects scenario-based experiment among industrial buyers, we find a positive effect of the presence of an ingredient service brand on buyers' perception of the end product's service quality, whether the host brand is of higher or lower quality. The effect is stronger when the quality of the host brand is lower. Furthermore, results indicate that the host brand generally has a stronger impact on the quality evaluation of the end product meaning that an ingredient service brand cannot fully compensate for a lower-quality host brand. For managers, our findings indicate that ingredient service brands provide a cue to product quality of the end product, indirectly improving purchase intentions. As a result, branded service ingredients offer host service brands as well as ingredient service brands a potentially powerful strategy for improving competitive position in B2B markets.