Taking on the counterfeiters
One of the world's most serious concerns is that of Brand Theft. Addressing and countering this problem involves a complex framework of technologies, communication, supply chain management, legislation, policing, enforcement and consumer protection combined with industry-broad initiatives and, quite often, nations acting in concert.
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In polls conducted at diverse seminars, conferences and industry meets over the last few years, it has emerged that everybody's overwhelming business concern and the one consequence simply about everyone wants discussed most urgently is brand theft.
There are various forms of make theft. Some of the most of import of these are:
– Counterfeit products
– Look-alikes
– Duplication
– Commutation
– Diversion or unauthorised distribution
– Organised retail theft
– Tampering with or without terrorist intent
– Returns and warranty fraud
Of these, the predominant business organization and the one that causes the about damage is counterfeiting, which takes various avatars. We could have apocryphal products in genuine packages, genuine products in counterfeit packages or a completely counterfeit organization with counterfeit products in counterfeit packages.
Brand theft could take implications ranging from loss of sales, loss of product "premium", liability risks, irreparable damage to brand or corporate image, serious erosion of make equity (that takes years of effort, massive financial investment and delivery of resources to build upwardly), product recalls, punitive statutory or legal activity and public disquiet and outrage all the way to widespread injuries, impairment of wellness or even fatalities. Recently, fears of product tampering with terrorist intent take too assumed serious proportions and new legislative measures or directives are being implemented to address this business. The infamous 1982 Tylenol tampering incident that led to multiple deaths and withdrawal of unabridged batches of the product from the market acquired a major upheaval in the packaging world and highlighted just how serious this threat could exist!
The problem is universal and affects every one of u.s.. In fact, with the proliferation in e-commerce and the slew of "bargains" we now see beingness offered on the internet, ane is never quite sure whether the product being supplied is the real Mckoy.
Just how serious is the trouble? Estimates on the size of the market place for counterfeit products vary from 8% to 10% of world merchandise (the International Sleeping accommodation of Commerce puts the figure at viii%). If one considers that global merchandise is presently estimated at some $ 8 trillion, the counterfeit element is a staggering $ 700 billion or more. What is even more than frightening is that this marketplace is supposed to exist growing @ almost fifteen% per annum (i.e. about 3 times the rate of growth in globe merchandise). It was once believed that counterfeiting was more than rampant in the case of more than expensive products but, reverse to this perception, Procter & Gamble accept reported that the highest incidence of fakes they come across is for one of their cheapest products – the hair care sachet that retails for less than 10 cents each. P & G estimate their annual losses attributable to counterfeiting as $ 225 million.
Tabular array 1 shows Pira International's estimates of segment-wise distribution of counterfeits. Of special business concern is the pharmaceutical market where the wrong product or lack of agile ingredient actually results in many cases of large-calibration deaths. I estimate claims that about 10% of drugs on the Due south E Asian market are spurious; in China, the regime judge that, for some drugs, the counterfeit chemical element is equally much every bit fifty%.
The accompanying chart gives the affect of counterfeiting on brand values as presented past Dr. Llewellyn of AWA at the recent Info Label 2006 briefing.
Another prime target of counterfeiters is tobacco products. According to a major US manufacturer, the number of counterfeit cigarettes produced in People's republic of china alone full 100 billion units per twelvemonth; this is equivalent to ane-third of the total market in the U.s.. What is more, well-nigh five years ago, it was easy to identify the fake products because of poor packaging and presentation quality but now the average consumer cannot make out the difference.
Ane of the problems is that, more oft than not, by the time the faux is detected, the impairment is already done – the production has already been sold or even used (sometimes with disastrous consequences). Therefore, it becomes of import to not but authenticate brands and products to ensure that consumers purchase only the genuine article but also to detect the presence of spurious products in the system and to trace and apprehend the perpetrators in question. Hence, industry uses two kinds of approaches – overt devices (eastward.thousand. holograms, colour-shifting inks, watermarks, security threads and intaglio press), which can be identified by fifty-fifty relatively lay and untrained people like consumers without the use of sophisticated methods or detection equipment, and covert devices (e.g. taggants, security fibres embedded in substrates, subconscious print marks etc.), which are aimed at concealing the fact that the product is being tracked and can be identified but by designated or trained personnel using special detection equipment.
The utilize of overt technologies necessitates that consumers or potential buyers, retailers and policing authorities be educated on how to identify genuine products; in the process, counterfeiters are also aware of exactly what devices are being used. On the other paw, while covert devices ensure that counterfeiters are non aware of the "surveillance" or how it works, they cannot aid consumers or retailers to authenticate products at the betoken of purchase. Each approach has information technology's ain utility and, quite often, one sees both kinds of methods being used together.
Time was when a complicated plenty impress design using a large number of spot colours (especially by rotogravure or flexography) was sufficient to thwart producers of counterfeits or look-alikes because there were a very express number of convertors with the requisite printing capabilities to reproduce information technology. However, with the rapid development of digital pre-printing processes and an abundance of relatively low-price presses capable of effectively "copying" tricky graphic designs and delivering good print reproduction, this arroyo is no longer a practiced enough deterrent. In fact, at the rate at which engineering development is taking place, virtually anti-counterfeiting devices give original manufacturers at best something like a 6-month pb before they are mastered by counterfeiters. Hence, experts aver that the only way to stay alee is past using a combination of overt and covert technologies and by often irresolute the devices being employed to proceed ahead of the game. In a recent study entitled "Combating Counterfeit Drugs", the USFDA points out that both prescription drugs and OTC products are at risk. Although the USA is well regulated and considered better protected against counterfeiting, in May 2003 alone, almost 20 meg doses of Lipitor had to exist withdrawn from the distribution organization. FDA strongly recommends a multilayer strategy that combines multiple overt and covert technologies along with RFID and abiding rotation of packaging strategies as the best defence confronting counterfeiting.
Ensuring brand security and product authentication is an expensive and, sometimes, heart-breaking business only, if ane values one's reputation and acknowledges that the value of even the most carefully built up brand can be destroyed overnight by a single unfavourable incident, one has really no alternative to protecting oneself confronting brand attack. The more than valuable or expensive the brand, the more vital it becomes.
Furthermore, with mandates on suppliers like those from Walmart and the US Department of Defense and on manufacturers and retailers similar those from the USFDA and Eu regime that demand efficient traceability across the entire supply concatenation, this necessity will only intensify.
As a well-known manufacturer of security devices puts it, "if yous can make information technology, someone can simulated it"!
In forthcoming bug, nosotros volition evaluate various options available and rail the developments and trends in this area.
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