Hidden Inside: International Flavors & Fragrances, Inc.
Founded in 1909 and based in New York City, International Flavors & Fragrances (IFF) manufactures flavors (46 percent of sales) and fragrances (54 percent of sales) for use in a wide array of consumer products.54 The Flavors segment offers compo- nents for use in consumer products such as soft drinks, candies, pharmaceuticals, snack foods, and alcoholic beverages. The Fragrances segment provides functional fragrances for personal care and household products, including perfumes and colognes. The firm's customer base consists of large consumer product companies such as Pepsi, Procter & Gamble, Estee Lauder, and Unilever. IFF generates over 40 percent of its sales from rapidly developing economies.
Large consumer product firms are quite reluctant to put their brands at risk, so these customers favor trusted global suppliers, like IFF, that can meet their supply needs around the world, as well as ensure the safety and quality of their products. However, IFF competes with three other large market participants-Givaudan, Danisco, and Firmenich. When a consumer product company wants to launch a new flavor or fragrance, IFF, along with each of these rivals, has been offered the opportunity to develop a scent, making it difficult to lock in customer relationships. Since the value that IFF contributes to a consumer product is "hidden inside" and the IFF name is unfamiliar to end customers, some challenging questions emerge for managing the firm's brand: Discussion
Questions. What strategies could IFF follow to differentiate its offering from those of competitors and strengthen its position with its core base of consumer product companies?