The CMO's Role in Curtailing Black-Market Counterfeits

How You Can Act as a Change Agent

By Published on .

Peggy Chaudhry
Peggy Chaudhry
Stephen Stumpf
Stephen Stumpf
Fake Prada, fake Gucci, fake Louis ... oh my! With revenues hovering in the $1 trillion range, it's clear the counterfeit market is thriving. What can marketers do as this market moves beyond high-fashion merchandise to include health and safety products, automobile parts, cigarettes and even pharmaceuticals?

CMOs have a responsibility to protect consumers against deceptive purchases and to do their part to curb black-market consumption on a whole.

To do this, marketers must understand what drives people to "go fake." Once consumers' motivations are clear, marketing strategists can serve as change agents to prevent the flow of counterfeit goods.

Our research has identified five tactics that industry professionals can institute to eliminate the myth that fakes are fun and develop more educated and savvy consumers.

1. Develop better measures of understanding consumer involvement. When evaluating consumer behavior and counterfeit products, it's important to understand the behaviors involved. At the Villanova School of Business, we have developed a "composite index of complicity" to measure purchasing power.

CMOs have a responsibility to protect consumers against deceptive purchases and to do their part to curb black-market consumption on a whole.
CMOs have a responsibility to protect consumers against deceptive purchases and to do their part to curb black-market consumption on a whole. Credit: AP
This index moves beyond simply asking yes or no questions on why consumers bought counterfeit goods to posing very specific questions that cover the entire imitation industry -- from counterfeit movies to pharmaceuticals -- based on past, current and intended future actions.

The index also factors in the role of peer buyers, whether consumers would give or take a fake from a friend, and the all-too-crucial shopping environment in which consumers made their fake purchases.

It's that kind of data that will provide marketers insight into consumer behavior that can be used to reverse the growing counterfeit market.

2. Identify successful "de-marketing" techniques. Learning from successful campaigns that have decreased alcohol and cigarette consumption, marketers can implement similar strategies to address consumer complicity with imitation products. Successful tactics center on messages that use fear, rewards and role models in anti-piracy advertisements.

For example, Pfizer launched a "regurgitated rat" campaign to build consumer awareness on the potential harm of fake drugs purchased over the internet. The Motion Picture Association's "You Can Click but You Can't Hide" ad also honed in on a fear-of-prosecution theme.

In an interesting twist, consumers have launched anti-anti-piracy ads to undermine "de-marketing" concepts. One web ad to rebut the MPA campaign bragged "You Can Sue, but You Can't Catch Everyone."

Despite backlash from such openly defiant consumers, these de-marketing techniques are expected to be one of the most helpful tools to reduce counterfeit product purchases by even some of the most complicit buyers.

3. Create credible links to organized crime/terrorists. There is evidence by brand managers and governments around the world that many counterfeit products are the work of organized crime, and profits earned are used to fund terrorism. Some agencies, such the Federation Against Copyright Theft, have run advertisements using the slogan, "Terrorist groups sell pirate DVDs to raise funds," to inform complicit consumers that supporting counterfeit markets is not as harmless as they assume.

As consumers, we know very little about these suppliers and some media glorify the pirates as heroes who redistribute wealth to the needy. The most difficult task for marketing managers, therefore, is to prove that the connection to terrorist-linked suppliers is valid.

4. Commit resources to wipe out pirates. Counterfeiting has taken a frightening turn down a path of non-traditional fakes such as automobile parts, cigarettes and pharmaceuticals. The intent to defraud consumers through the imitative packaging of counterfeit products is forgery, a felony crime of the federal government in all 50 states. The government should commit resources to eradicate pirates, as well as remove bogus goods from retail shelves. Brand managers need to aggressively pursue this type of litigation against pirates. Companies cannot rely solely on enforcement through government and police intervention.

5. Empower the consumer with product education. Can you tell the difference between a name brand and a counterfeit? Yes, the fake Louis Vuitton with neon yellow stitching on faux leather trim is screaming inferior quality -- but what about a counterfeit prescription drug? Pirates of pharmaceuticals are willing to spend a disproportionate amount of their time and money to create lookalikes that infiltrate the legitimate supply chain.

One way for marketers to empower consumers is by leveraging technology. Software firm Provalidate, for example, is developing an electronic warranty card for many companies that enables the consumer to authenticate purchases at the brand owner's website by using a sophisticated system of verification codes that also provides marketers with the opportunity to collect consumer data. Using an electronic warranty card for both physical and virtual purchases to ensure authenticity can -- and will -- empower consumers to buy legitimate products and encourage them to steer clear from the dangers of buying from underground merchants.

Peggy Chaudhry teaches international business at the Villanova School of Business and recently published (with Alan Zimmerman) "The Economics of Counterfeit Trade: Governments, Consumers, Pirates and Intellectual Property Rights."
Stephen A. Stumpf, the Fred J. Springer Chair in Business Leadership, teaches organizational and consumer behavior at the Villanova School of Business and recently published "Getting Real About Fakes" with Ms. Chaudhry in the Wall Street Journal.

The marketing strategies provided here are a result of Ms. Chaudhry's and Mr. Stumpf's recent web survey of 2,000 consumers in five countries -- Brazil, Russia, India, China and the United States.

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