Brands without an active anti-counterfeit strategy are leaving themselves vulnerable

Brand expert says brands not doing enough to protect their reputations

John Houston, CEO of YPB Group
John Houston, CEO of YPB Group

If brands don’t implement some kind of counterfeit protection now, they will find hard-won brand reputation and consumer trust eroded over the next 10 years.

This is the view of John Houston, CEO and founder of YPB Group, who works out of China on brand protection.

Publically-listed YPB Group is a brand protection and customer engagement solutions company that works to safeguard brands from the risks of counterfeit, product diversion and theft. Houston was motivated to set up the company following the deaths of Chinese babies following the sale of counterfeit baby food.

As 70 per cent of the world’s counterfeits come out of China, Houston developed an invisible, embedded tracer and scanning technology that brands can use to ensure the product they manufacture and package is the product that ends up with the consumer and on the shelves. Houston, who set up the company in 2011, said brands will require much more brand protection moving into the future, but it is also an excellent opportunity for brands to engage with consumers while doing so.

“Authenticity triggers and engagement between a consumer and a brand, but this is missing from a lot of brand strategies,” Houston told CMO. “In Australia, most consumers don’t really wonder if what they are reaching for is real or not, but the Chinese do, because counterfeiting is becoming such a big issue there.

“Globally, retail is finding it tough, as it’s changing, as is the way brands sell their products. There are new generations of ecommerce platforms coming out all the time, because it’s a very necessary channel for brands to sell their products.”

But this border-less selling environment is leading to brand protection issues, which will ultimately erode reputation and brand trust, a trust that is hard-won, hard to retain, and very easy to lose.

According to Houston, western brands will have to match their Asian counterparts, because Asian consumers always check if a product is real or not, and the rest of the world will soon need to.

“The incidence of brand counterfeit on ecommerce platforms is enormous, and it is going to be one of the biggest paradigms that occurs in the next 10-20 years in the world,” he claimed.

“This will change the brand feeling of confidence. Brands can sell directly to consumers now, but what about when daigous [people buying on behalf of] take something off a shelf and ship a product out of country? The brand has no control over that, so the ability to mark a product for authenticity and consumer piece of mind will be a much more important thing for a brand to do. Not only because it will protect the brands, but also because it can connect brands with the end customer, no matter where that product ends up, or where it is sold.

“It can create a direct dialogue between the brand and the end consumer, and this is going to become a much more important thing for brands to do moving forward.”

This is also true thanks to the rise of social media platforms like Instagram and Facebook, where products can now be bought via one click.

“When people buy on a platform like Amazon, if the product is not genuine there is a way for the consumer can get their money back. But on Instagram and co, the consumer clicking on a link and purchasing a product has no such protection, because it’s not Instagram facilitating the purchase, the site is just hosting the ad.

“So brand reputation and protection will be more important than ever. Social media can bring down a brand very quickly, so what are the risks for a brand? Counterfeit is one of them because the world becomes borderless.”

The global impact of counterfeiting by 2022 will be $4.2 trillion, which would rank it around the fourth biggest economy in the world.

“We in Australia don’t think about it, but we are going to have to,” Houston continued. “That trust you had isn’t necessarily there anymore. When you hear anecdotally that famous wine brands are selling more bottles out of China than the wine brands actually even made globally each year, then that doesn’t add up for consumers.”

As one of only a few anti-counterfeit technologies in Australia, YPB Group has a number of recommendations for brands looking to protect themselves.

“What a brand can do to protect themselves is in their brand promise. Very few brands so far have one of the pillars of what they stand for being protecting the consumer against counterfeit. They need to adopt a brand philosophy to protect their customers,” Houston advised.  

“Over the next 10 years, brands must do something to protect their end consumers, and then tell them they have. Encourage consumers to interact through genuine brand packaging, because it is also a great way to build a relationship with them.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu    

 

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