It’s widely considered that a brand is the sum total of “all the thoughts and feelings” associated with that brand. Quantifying the value of those thoughts and feelings is virtually impossible. Most companies will try to calculate their brand’s value taking into account market size, annual revenue, market share, profitability, brand awareness, brand loyalty, uniqueness and sustainability of products and services, quality of new products, investment in R&D, competitive landscape, and ability to raise prices, among other factors.
The bottom line though is, if you have employees, sales, profits, and a decent sales pipeline and/or established distribution channel, your brand has value. You recognize that, your customers and consumers realize that, and so do your bankers.
And, unfortunately, so do counterfeiters.
Counterfeiting of products and trademark infringement of intellectual property is pervasive and growing. It’s not just high-end luxury brands that are copied; counterfeiters knock off everyday items like discount store jeans, toothpaste, and inexpensive perfume—but without the safe ingredients. Counterfeit perfume has been known to contain horse urine, and confiscated counterfeit mascara has been found to contain dangerous levels of metals – which can lead to blindness. Counterfeits are big brand value detractors. The counterfeit consumer electronic industry alone is worth $169 billion. If your brand has counterfeit products offered online or in brick and mortar markets, you can subtract a large portion from your brand’s total value. Counterfeits account for $1 trillion worldwide, which is about the size of Australia’s GDP. The counterfeiting industry is growing faster than most legitimate ones. If you believe you’re brand is safe today, check back next week.
Once counterfeiting takes hold, your consumers will see less value in your authentic product, and your brand’s value will diminish. Consumers ask themselves, “Why pay for the real thing if the counterfeits look as good and cost a lot less?” Your brand reputation can be harmed if consumers are duped by counterfeits that don’t work. Only a small percentage of consumers contact customer service after they’ve purchased a counterfeit item; most throw the product away and assume the brand isn’t as good as its reputation would suggest. They also tell their friends. Disappointed or angry consumers tend to be far more vocal about a bad experience with a product than a good one—a brand reputation detractor for sure, since 46% of online users look to the Internet to help make purchasing decisions.
There are, however, affordable anti-counterfeiting solutions you can implement to help protect your brand, such as applying security labels with overt and covert characteristics to your products. These labels may also feature a unique, randomized serial number. This sort of security deters factories from producing unauthorized copies because without the secure label, the counterfeits will not pass investigator or customs inspections. This also deters shippers and distributors from diverting or stealing product because the unique serial number allows shipments to be traced to the source of that diversion.
Brands also need to monitor the markets where counterfeiters or their agents “dump” product—on large B2B and B2C online trading platforms. When counterfeits are identified online, the brand owner or a company working on their behalf should send Cease and Desist letters, monitor if sites have been removed, and build prosecutorial cases. This is a cost effective way to keep counterfeiting under control. We’re finding complex networks with thousands of linked retail affiliate sites. If we cut off their ability to collect payment, we put the entire network out of business.
As a brand owner you may feel like you need to invest in brand protection to add value to your brand. But it’s now just a way of doing business, much like having an accounting system or human resources department. On a unit basis, brand protection is like a tiny insurance policy that helps hold up your end of the brand promise to your consumers and constituents. When you are looking at what adds value to your brand, a brand protection program goes on the credit side of the ledger. With $1 trillion in counterfeits in the world, a good brand protection program can give you a strong competitive advantage.