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By blending all of the assets constituting brands, marketers are able to develop brands, which build goodwill between the brand producer and the consumer. As one advertising executive at Saatchi & Saatchi commented, ‘Powerful brands are just like families. They persist through thick and thin’. The goodwill that Coca-Cola has built up over the years is such a valuable asset that if all its production facilities were destroyed it could get adequate funds to rebuild them-using the goodwill from the brand name as security. Likewise, even though Mars Confectionery does not own property, hires its distribution vehicles and leases its machinery, it would cost any potential acquirer hundreds of millions of pounds-to buy this firm, since what are being brought are not the tangible assets, but the goodwill and reputation from the Mars name.
Unfortunately, the success of some brands has driven certain competitors to respond by developing counterfeits, that is to say, illegally-produced look-alikes, which take advantage of the inherent goodwill in brand names. It has been estimated by the Counterfeiting Intelligence Bureau that in 1995 fakes accounted for 5 per cent of world trade, and they have cost brand manufacturers in Europe approximately 100 000 jobs. Some markets are particularly prone to illegal imitators. For example, 60 per cent of software in Western Europe, 35 per cent of videocassettes in Asia and 25 per cent of audiotapes worldwide are unauthorized copies.
Some counterfeiters have invested heavily in production facilities. When Yves Saint Laurent unearthed one illegal copier and destroyed £11 m of fake perfumes, they found production machinery valued at £33 m. unfortunately, with such large sums to be made from counterfeiting, more sophisticated production facilities are being built. Glaxo, for example, once seized a consignment-of 6000 counterfeit packets of Zantac and were dismayed to discover that the packaging was so professionally copied that only under microscopes could any differences be noticed.
To reduce the scope for counterfeiters, marketers can register their trademarks, employ firms to track down copiers and devise more sophisticated packaging and batch-numbering processes. All of these enable brand owners to halt counterfeiters legally – until they find another way of circumventing the obstacles.
A balance also needs to be struck between the distinctiveness of the name and the extent to which it describes the goods that the brand name stands for. The more it describes the goods, the more difficult it is to register it. Paper Mate is a good example of a company getting; the balance right between the brand name’s communicability and its suitability for registration. Late in the 1970s it launched an erasable ballpoint pen in Europe, branded Replay. This was felt not to be able so descriptive of the product, and it was protectable.
Once the trademark has been successfully registered, it should be used as soon as possible and implemented with care. If sufficient attention is not paid to promotional details, there is a danger of the brand name lapsing into a non-protectable generic term, in its ad. Advertising copy, the Otis Elevator Company did not insert the line, ‘Escalator is a registered trademark of the Otis Elevator Company did not insert the line ‘Escalator is a registered trademark of the Otis elevator Company’ and in a subsequent court case the registration of its ‘Escalator’ trademark was cancelled.
To ensure that the brand name is not being infringed, some firms employ their staff to monitor retail activities. For example, Coca-Cola employees visit outlets that do not stock Coca-Cola and, without identifying themselves, ask for a Coca- Cola. If they are served a drink, which is clearly not Coca-Cola without any comment, a sample is sent for chemical analysis, and if it is not the actual brand, the outlet is asked to refrain from this action. Failure to comply results in legal action
An alternative way of policing the brand is to use private investigators, such as Carratu International. Particularly when there is evidence of a very sophisticated channel being used by counterfeiters, as was the case with Caterpillar parts, this is a very effective way if blocking imitators. Some firms are now so concerned about brand infringements, that detectives and legal costs are a significant expenditure. For example, 0.5 per cent of Givenchy’s turnover is spent on this. Some firms are trying to make the copying of their brands much harder. Glaxo started printing holograms on its packets of Zantac drugs to deter copiers, but it is only a matter of time before counterfeiters become more sophisticated. In some markets, such as car parts, it is much more difficult to apply an inexpensive security device.
While the Internet offers new opportunities for brands it can also create legal problems. The geographical and jurisdictional boundaries that limited the legal concept of trademarks do not apply to the global communication system of the Internet, facilitating communication among millions of independent users. These users rely entirely on their unique Internet name, i.e. their domain name, for registration and identification.
Currently a user can choose any domain name, provided it has not yet been registered, almost regardless of the fact that this might be an existing brand name. A check is done to ensure that the domain name is unique but no check is done as to whether the user is entitled to use the same. For example Harrods sued opportunists who had registered the domain – ‘Harrods com’ to profit from this famous brand. Fortunately the course applied existing legal rules to the Internet and ordered the user to hand over the domain name. However, companies should not merely rely on time-consuming legal measures with often unpredictable outcomes, but should proactively register their corporate and brand names as Internet addresses. Whilst counterfeiting is likely to pose a continuing threat to manufacturers, it is only one of the many challenges that face marketers, who must continually devise added-value strategies to succeed.
