There is no question that counterfeiting is negatively impacting profits, consumer safety, and business reputations in virtually every industry worldwide. Several market factors have fueled this growth. The Internet, for all the benefits it has provided in terms of information sharing and commerce, has been a key turning point in the growth of counterfeiting. It is estimated that a full 25 percent of global Internet commerce is counterfeit. Another factor influencing the rapid spread of counterfeiting is simply the growth in consumption of goods worldwide. As economies develop, and new markets are exposed to inexpensive consumer goods, the sheer number of items purchased every day has grown exponentially.
Even though the threat from counterfeiters is very obvious, companies are often stumped at how to implement an effective program to counteract counterfeiting, relying on piecemeal (and often inefficient) enforcement methods. The first step in implementing a successful anti-counterfeiting program is to assess the impact counterfeiting is having on your business. This can be done in a number of ways and the most effective campaigns often integrate several analysis tools to arrive at a complete understanding of the problem. Analysis methods include tracking electronic traffic to determine both the source of and retail outlets for counterfeiters, and to gauge the percentage of sites selling authentic products versus those that are fake. To that end, anti-counterfeiting counsel usually work with investigators who utilize proprietary software solutions to regularly monitor search engines, online marketplaces, auction websites, B2B websites and social media sites for counterfeit products. Businesses can also research the source and volume of any counterfeit products or parts returned for service, canvass trade shows for look-alike (but perhaps not branded) products, and evaluate sales data to determine whether any regions have experienced unexpected slowdowns in sales — which could mean that a counterfeiter has infiltrated the supply chain.
The second step is to recognize that counterfeiters are really no different from any other competitor. Intellectual property theft is felt throughout the entire organization, through loss of revenues, tarnished brands, increased burden on customer service and tech support, loss of consumer confidence, and liability exposure. Shifting the corporate approach to anti-counterfeiting by characterizing it as a competitive concern helps it become a strategic issue that different divisions of the company can work together to solve. Companies that are most successful at combatting counterfeiters involve and engage all business units, utilizing some combination of consumer education, regular monitoring, careful sourcing, supply chain oversight and enforcement.
The third step is to engage in regional and product prioritization. The absence of a defined geographic or product-based approach can result in a scattershot program that lacks focus and efficiency. Once you know where your issues are, you can look at the numbers to determine the most straightforward way to address the areas that will have the greatest impact. For example, perhaps there is a gap in IP protection versus where the market share is. Or perhaps the issues are stemming from a region in which you have no presence, as counterfeiters do not always follow the business but sometimes fill-in market gaps. For some companies, the priority is a particular high-profit or high-profile product line. Once you have the data, you can map out an internationally coordinated, intelligence-driven program that addresses key area of concern, and prioritizes where the budget should go.
The fourth step is determining how the success of your campaign will be measured. Effective initiatives can be measured in terms of whether you are able to shut down a particular market or counterfeiter, lessen the percentage of counterfeits found in online marketplaces, and/or increase the company’s sales and market share. They can also be measured in terms of the numbers of products seized/destroyed, the number of actions brought and any dollars received. Many benefits of a successful campaign are harder to measure but just as valuable — including enhancing the integrity of the brand and consumer confidence.
The final step is to set a budget; arbitrary budget definitions are the bane of anti-counterfeiting programs. Businesses should consider whether the budgeted items align with business needs and goals — one of the many reasons it is important to get buy-in from the different business units. It is also important for budgets to allow for some built-in flexibility, and to allow for emergency actions. After the initial evaluation and prioritization, the ideal budget would allow the company to maintain a low-cost flow of monitoring and routinized enforcement, and react aggressively when necessary.
The road to establishing an effective anti-counterfeiting program that produces measurable results and stays within budget can seem daunting. But, by beginning with marketplace data and prioritizing businesses efforts, you can effectively address the losses posed by counterfeiters.