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Typically, the bigger the brand, the more the chances of it being picked up by counterfeiters to copy, fake and sell. From shampoo, batteries, auto components, clothes to DVDs-CDs, prescription drugs and electrical equipments, every product in every industry is vulnerable. Abanti Sankaranarayanan, Executive Director and Deputy CEO of Mount Everest Mineral Water Limited (another bottled water brand facing the onslaught of smart fabricators) explains, “The counterfeit market is impacting not only companies and their consumer base but also affects the country’s growth.” Incidentally, the government is losing over Rs.9 billion every year, due to sales tax accruals from such unauthentic products.
Market watchers confirm that highly popular and advertised brands are the most likely victims of counterfeiting or piracy, targeted because of their demand and the ‘aspirational’ tag attached to them. The FMCG sector is reportedly losing Rs. 80 billion every year due to counterfeiting, where as SIAM estimates the size of the counterfeit auto parts industry at between Rs.44-63 billion. Says Zaheer Khan, Chairman, EIPR: “Companies spend huge amounts on advertising to increase market share by 1-2%. Anyone losing 10-20% share due to counterfeiting is a huge revenue loss.” Adds Aakash Taneja, Executive Director, Institute of Intellectual Property, FICCI, “Estimates suggest that Bollywood alone suffers losses to the tune of Rs.30 billion every year with films alone suffering Rs.20 billion annually to piracy.” The black market for pirated software in India stands at a whopping $1.275 billion. You do the math!
On their part, more often than not, companies turn a blind eye. After all, imitation is the best form of flattery, right? And if only 2-3% counterfeiting of your brand is there, you wouldn’t bother. But Khan says that it’s important to have checks and balances. “Counterfeits can never stop, but can be brought down to manageable limits. Limits can be defined by brand-owners only,” he says.
Vedavalli Rangan, Industry Manager, ICT Practice, Technical Insights, Frost & Sullivan adds that while in the short run, imitation may seem the best form of flattery (seemingly enhancing brand awareness), “in the long run, the company loses out on its brand image.” The impact is felt largely in rural parts of the country, as illiteracy and low-awareness makes identification of brands synonymous with their packaging. The task of the fake manufacturers becomes explicitly easier in such cases, as they retain similar packaging with minor name modifications - a la Bonds for Ponds, Flair and Lovely for Fair & Lovely, Abibas for Adidas, et al.
The government, investigation agencies and IPR enforcers are making best efforts to track and tackle the menace, but in a country boasting a huge and diverse market, not to mention a less-than-stellar record of coordination among enforcement agencies, the counterfeit industry is flourishing and how. Entrepreneurs like Komla and Das are being born every day. And while the trendy marketer can hardly afford to shun advertising, the only solution in sight appears to be further strengthening brand awareness, reach and penetration, so consumers are not taken in by ‘Demin’ instead of Denim!
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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