How brands can protect themselves from counterfeit products

India's counterfeit products industry is growing nearly four times faster than the original brands and causing a loss of more than Rs one lakh crore to the companies. The industry, which was predominantly offline until a few years ago is now growing rapidly on the back of India's e-commerce revolution, making it simpler for consumers to buy.

Among various factors that are leading to the growth of this market, which is causing harm to both the brands and consumers, is one significant rationale — people are willingly buying fake products over the authentic ones.  As Alibaba’s Jack Ma once said that the problem is that fake products today make better quality, better prices than the real product.

While consumers do understand the quality of an original Adidas or of a pass-off, and with brand awareness campaigns like Bisleri’s ‘HarPaaniKiBottleBisleriNahin’, what could possibly force a customer to opt for a counterfeit not minding the quality?

BestMediaInfo.com spoke with brands and agencies to understand if that holds the truth in willful counterfeiting and what a brand perhaps can do in such a case. They discuss how a brand should construct its communications and other strategies, making it counterfeit-proof.

Shashank Sharma

“Fact is that if the basic functional requirements and some symbolic value are achieved, consumers can be lured into the willful purchase of counterfeit products. Counterfeiting is often viewed as a victimless crime. They see it as a ‘great deal’, especially with respect to luxury goods that are perceived to be overpriced. The customers’ attraction towards these counterfeits is directly proportional to the price of these products and the huge discounts that these fake products can offer,” said Shashank Sharma, Principal FMCG, DAN Consult.

A lot of factories that have been manufacturing products for major global brands for a very long time are now highly skilled to make imitation and counterfeit products. OEMs (Other Equipment Manufacturer) are able to manufacture decent quality products at a lower cost and sell at a significantly lower price since they don’t need to invest behind research and development or brand building.

BK Rao

BK Rao, Sr. Category Head Marketing, Parle Products, said, “Wilful counterfeiting means there is a lacuna in the brand itself. That means the original brand is somewhere weak. That is why a consumer is willing to go for a fake product. The brand hasn’t made itself counterfeit-proof and there is an opportunity for the brand to address and to fulfil that consumer need gap in terms of pricing, distribution and manufacturing.”

Rao explained how the brand for such a low-involvement product such as Parle G biscuits made it available across the retailers with pricing so dynamic that did not leave any gap for the pass-offs. 

Mansoor Ali

“Controlling ‘willful counterfeiting’ is a tricky situation as here the consumers may indulge in purchasing a fake product due to lower pricing. To combat such scenarios, we need to come up with stringent laws where the trade selling the product and consumers are fined heavily. The laws should be made known to the public through seminars along with educating them on the adverse effects of ‘wilful counterfeiting’,” said Mansoor Ali, Chief Sales and Marketing Officer, Hamdard.

Although these manufacturers may be able to produce goods at a lower cost, they lack a seamless offline sales channels and their reach is quite limited. However, with the option of online selling opening up and with the direct marketing power of the internet, these counterfeiters don’t need to rely on international brand names to generate profit. So online and e-commerce have certainly contributed to the rise in fake goods.

Has e-commerce aided the rise of fake products industry 

“I don’t think it’s a coincidence that a rise in e-commerce in the last few years has coincided with the sharpest growth in fake goods across industries. In a recent survey, about 29% consumers said that they had received a counterfeit product from one of the leading e-commerce players in India in the last one year. Since the ‘marketplace’ format of the likes of Flipkart and Amazon facilitates trade between sellers and buyers, these online retailers are not very well-placed to control this problem either,” said Sharma.

“The rise in the fake goods can be attributed to the online selling for one significant reason that the digital platforms have built the bridge with immense speed, and successfully connected the supply and demand at a global level. The rapid escalation of fake goods trading might be also because making out the difference between fake merchandise and the actual product online is difficult for consumers. Also, there are cases where the image on the website is original, but a fake or refurbished product reaches the consumer,” Ali said.

A recent report by FICCI CASCADE points out that the volume of counterfeiting activity globally has surged 100 times. Many reports suggest that by 2022, the global counterfeiting industry is predicted to be worth $4.2 trillion. To put this in real terms, if counterfeiting were an independent nation, its economy would be around the fourth biggest in the world.

The counterfeit products, often, are not on a par in terms of quality, which reflects poorly upon the brand and impacts its equity. These products are also sold at a lower price and so the original brand may even lose its premium status and market niche.

Counterfeits impairing brand’s image:

“Reputation suffers when consumers attribute product dissatisfaction with a fake or imitation product to the original brand. The brand owners may even resort to lowering their price in response, which further devalues the brand as it is perceived to not warrant the premium price anymore,” said Sharma.

Counterfeiting diminishes the trust and goodwill that the brand enjoys due to various brand-building activities and its lineage of consumer trust. For a consumer, the difference between a fake and the actual product is sometimes difficult to make out, it is always the brand’s quality service and reputation that is compromised, Ali said.

Reports say that if counterfeiting is reduced by 50%, it can save more than Rs 50,000 crore. So, clearly investing in this problem makes perfect logical sense.

Protection strategies for brands to combat the fakes:

More than a dozen leading corporates in India have joined hands to wage a war against counterfeiting under the aegis of FICCI Brand Protection Committee. They have stressed on more focus behind enforcement and application of laws, taking direct action against illegal manufacturers, traders, wholesalers and retailers and enhancing communication among the stakeholders.

There are many ways that companies can adopt to combat the menace of counterfeiting such as formally registering intellectual property, signing NDAs with partners, registering relevant domain names, removing harmful sites, implementing an authorised dealers programme, establishing a strong media presence and educating consumers to recognise the difference between legitimate products and fakes.

Ali said, “Brands can provide a clear and informative visual guide of their products showcasing how the consumers can differentiate between the real and the fake. The key to educating consumers about counterfeiting is to highlight aspects of your product that are the most difficult to copy perfectly.”

Bisleri went viral with its #HarPaaniKiBottleBisleriNahin campaign and the amount of buzz it created on social media was immense. Amazon acknowledged the sales of counterfeits and pirated items as a risk in its annual earnings report, which signals how big a problem this has become. With its Project Zero, it is the raising issue of counterfeits sold by third-party sellers on the online marketplace. There are other players in the industry that are working to drive counterfeiting to zero. Consumers are also more aware while making their purchase with such campaigns.

With the advent of technology, brands can take advantage to curb counterfeiting using overt features. There are many software available which release product information and brand ownership details when the product bar code is scanned. In fact, the Smart Consumer app from the Department of Consumer Affairs (Government of India) serves the same purpose.

Utilising universally accepted global standards organisations should build and implement a track and trace system to achieve improved traceability and transparency along the supply chain, Sharma said.

Using AI to detect counterfeit products being sold online and block illegitimate ads promoting such products, blockchain for tracking and tracing technologies can be used to determine where and when a product was manufactured and its current status in the supply chain.

There can be simpler solutions like the one developed by ASPA, which includes a mobile and web application and an SMS facility that will enable brand owners and consumers to authenticate the originality of products. RFID technology is a good adoption as it provides a step-up in protection against copying and tampering.

Another great emerging solution is the use of AI-backed tags that enable the buyers to scan the open part of the tag to check product authenticity with a certain probability and once they purchase the product, they can open the scratch-able part and scan it to be sure of the product authenticity.

Even Alibaba recently implemented a machine learning system to detect counterfeit products and sellers, which have helped it crackdown on fake goods in a big way.

Info@BestMediaInfo.com